A N N U A L R E P O R T
for the year ended 30 September 2021
Power Metal Resources plc
Registered number: 07800337
POWER METAL RESOURCES PLC
CONTENTS
Company Information
Chief Executive Officer’s Review
Highlights
Introduction
Operations Review
Corporate Social Responsibility
Financial Review
Targets for 2022
Board Changes
Outlook
Strategic Report
The Board of Directors
Directors’ Report
Chairman’s Corporate Governance Statement
Independent Auditor’s Report to the Members of
Power Metal Resources plc
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
- 30 September 2020
Consolidated Statement of Changes in Equity
- 30 September 2021
Consolidated Statement of Cash Flows
Company Statement of Financial Position
Company Statement of Changes in Equity
- 30 September 2020
Company Statement of Changes in Equity
- 30 September 2021
Company Statement of Cash Flows
Notes to the Financial Statements
Page
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POWER METAL RESOURCES PLC
COMPANY INFORMATION
Directors:
P Johnson
S Richardson Brown
Ed Shaw
Chief Executive Officer
Non-Executive Director
Non-Executive Director
Company secretary:
ONE Advisory Limited
Company number:
07800337
Registered office:
Auditor:
Nominated Adviser and broker:
Joint brokers:
Solicitor:
201 Temple Chambers
3-7 Temple Avenue
London EC4Y 0DT
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
London E14 4HD
SP Angel Corporate
Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
SI Capital Limited
46 Bridge Street
Godalming
Surrey GU7 1HL
First Equity Limited
Salisbury House
London Wall
Finsbury
London EC2M 5QQ
Druces LLP
Salisbury House
London Wall
London EC2M 5PS
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Highlights from the year under review:
Operational
After an extensive preparatory period drilling commenced in October 2020 at the Molopo Farms
Complex Project (“MFC Project”) in Botswana, where the Company funded US$500,000 of
exploration costs to earn-in to a 40% direct project interest. Results were released during the course
of the year with potentially significant nickel sulphides identified from the three hole drill
programme and the company completed its earn-in during April 2021, securing a direct 40%
interest in the MFC Project.
In January 2021 an option was secured over exploration interests in the Paterson Region of Western
Australia and during 2021 various amendments were made to this original option culminating in
the acquisition of a 5 licence exploration package covering 751km2 post-year end. Work undertaken
during the year demonstrated the presence of magnetic bullseye anomalies demonstrating
geological and geophysical similarities to the Havieron deposit discovered by Greatland Gold plc.
January 2021 saw option agreements signed over exploration project interests in the Hemlo
Schreiber region in Ontario Canada, with options crystallised in the year and it was then announced
in September 2021 that the entire interests in the Hemlo Screiber region were sold to First Class
Metals Limited (“FCM”) for £1 million through the issue to wholly owned subsidiary Power Metal
Canada Inc of 333,334 FCM shares at £3 per share. FCM is seeking a listing on the London capital
markets.
The Company saw its 49.9% owned joint venture in the Victoria Goldfields see its first licence
applications granted and the launch of inaugural ground exploration in February 2021, with
various updates released during the year confirming additional licence grants and gold exploration
progress.
In March 2021 the Company confirmed the acceleration of its earn-in to a 30% holding in the Silver
Peak silver project in British Columbia, Canada, and in July 2021 diamond drilling commenced
which would ultimately lead to the discovery of further bonanza grade silver, with significant
copper, lead and antimony credits.
Also in March 2021, the company announced a business update from its 50% owned joint venture
with Kavango Resources plc in the Kalahari Copper Belt (“KCB”), Botswana that saw the signing
of conditional acquisition agreements to acquire 8 new KCB licences and increasing the joint
arrangement’s KCB ground footprint to 4,255km2. The acquisitions were completed in August 2021
and saw all KCB interests transferred to a new 50% joint operating company Kanye Resources Pty
Ltd.
In May 2021 the Company secured an option agreement over two gold – nickel prospecting licences
in Botswana, and after due diligence exercised the option in July 2021. Accelerated exploration led
to the discovery of multiple kilometre-scale gold, nickel and arsenic anomalies announced in July,
ultimately leading into a post-year end reverse circulation drill programme. Following option
exercise the two licences underlying the properties (the “Tati Project”) were successfully
transferred post-year end into a new 100% Power Metal owned Botswana holding company, Tati
Greenstone Resources Pty Ltd.
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
June 2021 saw the Company sign an Assignment and Assumption Agreement to acquire a right to
earn into a 100% interest in the Golconda Summit Gold Property in Nevada USA, marking the
Company’s first project in Nevada.
Also in June 2021 acquisitions in Nevada continued with the acquisition of a 100% interest in the
Stonewall and Garfield exploration projects from fellow AIM listed Sunrise Resources plc.
July 2021 saw the identification of rare earth element drill targets at the Ditau Camp project in
Botswana, also held in the 50% owned joint venture with Kavango Resources plc, Kanye Resources
Pty Ltd.
The Company signed an agreement in July 2021 through which it may acquire a 100% interest in
the Authier North lithium exploration property in Quebec, Canada, situated adjacent to Sayona
Mining’s (ASX:SYA) Authier lithium project.
In September 2021 the Company launched a uranium staking programme in the Athabasca area of
Saskatchewan, Canada which ultimately saw c.412km2 of ground staked, allocated into 7 project
packages.
Financial
Loss for the year to 30 September 2021 of £622k (2020: £1.4 million);
Pre non-controlling interest total equity of £6.3 million at the year-end (2020: £2.7 million); and
Raised £3.6 million in cash during the year from the exercise of Power Metal share warrants,
including by directors.
Post-year end
For information regarding events after the reporting date, see note 25 to the financial statements.
Introduction
Power Metal Resources is an energetic hub of activity we believe to be uncommon to the junior resource
space, and certainly to an extent it has not previously experienced as a public company.
The refinancing and restructuring undertaken in February 2019 kickstarted a pathway of aggressive
repositioning and confident growth, which was the only way to restore the market’s confidence after
the Company’s failings of the past.
We commenced this financial year with six African project interests, augmented by precious metal
interests in North America and Australia. We ended the year with a global business with considerable
portfolio interests across North America, Africa and Australia.
We have a model of proactive project search, selection and acquisition, followed by immediate
exploration to increase value. Thereafter projects enter our in-house exploration portfolio or our
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
corporate channel where we seek disposals or spin-outs to generate significant value to build our asset
base and financial strength.
Our model is highly flexible, provides long-term sustainable balance sheet growth and is driven by
clear objectives, notably to do all in our power to generate high returns for shareholders, working fairly
with all business partners and protecting and offering opportunity to the communities in which we
operate.
Operations Review
Projects
Africa
Botswana
Power Metal currently has six projects in Africa with a main focus on Botswana, recognising the
extremely positive operating environment for diligent and respectful resource exploration companies
in country, and the tremendous resource endowment offering junior exploration companies the
opportunity for district-scale metal discoveries.
Our joint operation with Kavango Resources plc has been structured under a single vehicle, Kanye
Resources Pty Ltd (“Kanye Resources”) (See note 12 Investments in Associates and Joint Ventures, note
13 Joint Operations, and note 10 Intangible Assets), a Botswana private company in which we hold a
50% interest and into which all prospecting licences have been transferred. The previously announced
plan is for our interest to hive up into Kanye Resources PLC, a UK vehicle which would be used as the
host for a listing in the London capital markets. That plan remains in place, albeit we have a high level
of ground exploration underway, and our focus during the recent financial year has been on further
value enhancement across the portolfio via these various ground exploration programmes. As the hive
up has not yet taken place, the joint arrangement has been reclassified as a joint operation in the
financial statements, see notes 12 and 13 for further detail.
Ground exploration has delivered positive results with numerous prospective drill targets identified
across the South Ghanzi project in the Kalahari Copper Belt (“KCB”) targeting copper-silver and at the
Ditau Camp project targeting rare-earth elements and base metal mineralisation.
We have successfully added to the South Ghanzi project in Botswana, with the addition of eight more
prospecting licences in the financial year, including the South Ghanzi extension and Mamuno licences
at a cost of US$430,000 split 50/50 with our partners, Kavango Resources plc.
At the year end Kanye Resources held 4,257km2 of prospective KCB ground over ten licences and
1,386km2 of ground over two licences representing the Ditau Camp Project. This is an immense land
holding, with ongoing ground exploration proving up multiple drill targets and plans for extensive
drilling as soon as detailed preparatory work has been completed.
The financial year also saw the acquisition of the Tati Project in Botswana, comprising two prospecting
licences located near Francistown which are prospective for gold and nickel. The Company exercised
its option to earn 100% over the project in July 2021 and paid a cash option fee of £50,000 which may be
offset against future drilling costs incurred by the project vendors’ wholly-owned drilling services
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
company. Up to 5,833,332 shares to be issued at 3.0p comprises most of the consideration with an
additional 5,833,332 warrants over new Power Metal ordinary shares (50% at 5p and 50% at 7.5p).
Thorough due diligence and post-option exercise exploration programmes led to the identification of
multiple kilometre-scale gold, arsenic and nickel anomalies which were subject to follow up exploration
and notably a post-year end reverse circulation drilling campaign.
Finally in Botswana, the Company made significant progress at the Molopo Farms Complex project
(“MFC Project") located in Botswana, where the Company funded US$500,000 of exploration and in
April 2021 completed its earn-in to acquire a 40% interest in the MFC Project. The funding covered the
drilling of 3 deep diamond drillholes into 3 geophysical targets, with the second hole successfully
intersecting nickel sulphides and platinum group metals as announced in April 2021.
Follow-on technical analysis continued during the year with positive findings released to the market
leading to an option being signed post-year end with Kavango Resources plc, for Kavango to take an
interest in the MFC Project by acquiring the majority of Kalahari Key Mineral Exploration Pty Ltd.,
which holds the remaining 60% MFC Project interest after the completion of Power Metal’s earn-in.
The Democratic Republic of the Congo (the DRC)
The Company has a 70% interest in the Kisinka Project in the DRC where previous exploration saw the
identification of a 6.8km copper-cobalt anomaly. In November 2020 assay results from a pitting and
mapping exploration programme demonstrated high copper and cobalt values.
In May 2021, the Kisinka Project was awarded a 25 year production licence adding further value to the
project and the next step including plans for exploration were developed. Ultimately it was determined
that exploration drilling was the best follow-on step, and the company continued to work post-year
end to implement this in an acceptable manner.
Regrettably operational progress has been difficult to secure in an acceptable manner in country, across
a number of areas that we are seeking to resolve. The next step in our planned exploration would be
drilling, a costly affair requiring us to have operational confidence through a well planned and cost
effective drill programme. Also, it is important to have the bedrock of strong commercial relationships
in country to underpin the project now, and particularly in the event of forward exploration success.
We have not had adequate progress of late, or sufficient confidence to invest further at this stage, and
given this underlying uncertainty have taken the current decision to impair our investment in full at
this time (£841,000 including £156,000 investment and £685,000 intercompany loan balance). This is an
accounting transaction only which has no impact on Power Metal’s cash position and we will continue
to work in-country to secure the progress we need to push this project forward.
It is also noted that Power Metal deploys a continuous review of project specific capital allocation,
focusing its resources on those projects that offer the best potential value upside and security of tenure,
whereby value generated will be protected, notably following major value events including commercial
discoveries.
Tanzania
The Company holds a 35% stake in the Haneti Project in Tanzania with partner and fellow AIM listed
Katoro Gold plc (LON:KAT) holding the remaining 65%.
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
During the year a rotary air blast drill programme was undertaken at the Haneti Project, seeking to
help delineate drill targets for follow-on diamond drilling. The positive outcome of this programme
was announced in April 2021, which included the confirmation of targets and the discovery of new
gossanous nickel-copper veining at the Mihanza Hill target. Deep diamond drilling was confirmed as
the next step and this commenced post-year end in January 2022.
Australia
First Development Resources
During the year the company increased its exposure to Australian exploration opportunities with an
option secured in January 2021 to acquire a 100% interest in First Development Resources Pty Limited
(“FDR Australia”), a company which held two exploration licence interests in the Paterson region of
Western Australia.
Various amendments were made to the original option agreement during the course of the year and
post-year end the Company acquired FDR Australia outright through its wholly owned UK company
First Development Resources Limited (“FDR UK”). At the time of acquisition, FDR Australia had
interests in five exploration licences located in the Paterson region and during the year and post-year
end all FDR Australia licence interests achieved granted status enabling the launch of inaugural ground
exploration. Furthermore, heritage agreements with the native title holders were prepared as a precusor
step required in advance of a planned diamond drilling campaign targeted in 2022.
The intention is to list FDR UK on the London capital markets and during the year and post-year end
work was undertaken in order to advance the company towards its planned Q2 2022 listing.
Exploration was undertaken during the year which led to the identification of three magnetic bullseye
targets at the Wallal Project as announced in July and September 2021. The Company believe that the
anomalies bear geophysical similarities to the Havieron deposit discovered by fellow AIM listed
Greatland Gold plc (LON:GGP) and also located within the Paterson region.
New Ballarat Gold Corporation
At the start of the year Power Metal held a 49.9% interest in Red Rock Australasia Pty Ltd (“RRAL”), a
joint venture vehicle with exploration licence interests in the Victoria Goldfields, Australia. The
remaining 50.1% was held by fellow AIM listed Red Rock Resources plc (LON:RRR).
In September 2020 RRAL held 2,188km2 of ground across twelve licence applications where the
application status meant material ground exploration could not be undertaken. During the course of
the year, a number of licence applications were granted and ground exploration was launched.
By the year end, seven licence applications had been granted covering 848km2 and 1,458km2 over nine
licence applications were awaiting grant.
The original plan for RRAL was to secure a listing in Canada, however in August 2021 the joint venture
partners confirmed the focus for the listing was changed to the London capital markets. Reflecting this,
and post-year end, the partners’ interest in RRAL was hived up to a new company New Ballarat Gold
Corporation PLC, with Power Metal holding a 49.9% interest as before.
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Exploration work during the year and post-year end delineated multiple drill targets which led to the
commencement of diamond drilling in December 2021 for Buninyong, EL007271, and Pitfield EL007301.
North America
Silver Peak
Just prior to the start of the financial year, in September 2020, Power Metal exercised an option to earn-
in to a 30% interest in the Silver Peak project, in British Columbia, Canada.
To secure this option, Power Metal made a payment of £129,683 to the vendors comprising CAD$30,000
(£17,183) cash and £112,500 through the issue of 9,000,000 new Ordinary Shares (the "Option Exercise
Shares") at a price of 1.25p per Option Exercise Share. In addition, the vendors were granted 9,000,000
warrants to subscribe for new Ordinary Shares in the Company at a price of 1.75p with a three-year life
to expiry.
The earn-in was competed in the financial year, as announced in March 2021. In the original agreement,
Power Metal was to pay CAD$250,000 against exploration expenditure at the Silver Peak
Project. Previously Power Metal had paid CAD$141,048 and the remaining CAD$108,952 (£62,313) was
paid to clear the outstanding balance.
In addition Power Metal made a final earn-in payment of CAD$200,000 (£114,349), satisfied by the issue
of 5,139,281 new Ordinary Shares to the vendors of the Project. The number of shares to be issued was
based on an agreed seven-day volume weighted average price of Power Metal shares of 2.225p.
In addition, the vendors received 2,569,641 warrants to subscribe for new Ordinary Shares exercisable
at a price of 2.89p representing a 30% premium to the issue price of the final payment shares. The final
payment warrants have a three year life to expiry from the date of announcement.
During the year, two drill programmes were undertaken at the Silver Peak project, the first in
November 2020 which was curtailed due to poor weather conditions. Notwithstanding the challenges,
the programme successfully delineated very high-grade silver including 5,270 g/t silver (169.5 troy
oz/t). A further drill programme was undertaken in summer 2021 and completed in August 2021.
Results from this programme and from subsequent overlimit assays were announced after the year end
and demonstrated extensive bonanza grade silver.
Authier North
In July 2021 the Company announced an agreement to earn-in to the Authier North and Duval East
lithium exploration properties in Quebec, Canada.
On signing of the agreement, Power Metal, on behalf of Power Metal Canada, made initial earn-in
payments to the vendors including a cash payment of CAD$15,000 (c.£8,777) and a share based payment
of CAD$50,000 (c.£29,257) through the issue of 1,063,891 new Ordinary Shares of 0.1p each in Power
Metal at a price of 2.75p per share, ("Initial Earn-in Shares"). During the first year Power Metal must
expend CAD$25,000 (c.£14,628) on exploration costs on the properties.
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
In year 2 Power Metal will make a cash payment of CAD$25,000 to the vendors and a further share
based payment of CAD$50,000 with the number of new Ordinary Shares based on the ten consecutive
trading day volume weighted average Power Metal share price prior to the delivery of written
confirmation to the Vendors that Power Metal Canada wishes to proceed to year 2 of the Option. During
the second year Power Metal must expend CAD$50,000 on exploration costs on the Properties.
In year 3 Power Metal will make a cash payment of CAD$25,000 to the Vendors and a further share
based payment of CAD$75,000 with the number of new Ordinary Shares based on the ten consecutive
trading day volume weighted average Power Metal share price prior to the delivery of written
confirmation to the Vendors that Power Metal Canada wishes to proceed to year 3 payments. During
the third year Power Metal must expend CAD$100,000 on exploration costs on the Properties.
Should all payments be made above, the total cost to Power Metal, on behalf of Power Metal Canada,
would be £242,832 over a maximum 3 year period, and following that expenditure Power Metal Canada
will hold a 100% interest in the Property. Power Metal Canada can elect to accelerate all expenditures
should it wish, at any time, to allow earlier completion of the earn-in.
There is an existing 1% net smelter royalty ("NSR") over the Properties that will remain in place. In
addition, on completion of the earn-in Power Metal will grant to the Vendors a further 1.25% NSR (the
"Vendor NSR") and 0.5% of the Vendor NSR may be bought back by Power Metal Canada at any time
for a cash payment of CAD$500,000. In total, prior to any buyback, the total NSRs amount to 2.25% over
the Property.
A soil sampling and mapping exploration programme was announced in September 2021, with the
results released after the year end.
Athabasca Basin
In September 2021 the Company announced the staking of four 100% owned uranium exploration
properties covering a combined 10,869-hectares (109km2) giving Power Canada a strong foothold in the
prolific Athabasca Basin. The properties include the Clearwater Uranium Property ("Clearwater"), Tait
Hill Uranium Property ("Tait Hill"), Thibaut Lake Uranium Property ("Thibaut Lake"), and the Soaring
Bay Uranium Property ("Soaring Bay").
Building on this initial acquisition, later in September 2021, the Company announced an increase of
ground to 241km2 achieved through the staking of additional ground immediately surrounding the
Company's Clearwater, Tait Hill, and Soaring Bay uranium properties, as well as the acquisition of
three additional uranium properties including the Cook Lake, E-12, and Reitenbach properties
(together the "Properties").
The cost of acquisition of the Properties was the staking cost only amounting to CAD$14,458 by the
financial year end. The uranium properties are held by Power Canada through its 100% owned holding
company 102134984 Saskatchewan Ltd.
Ground staking to build the footprint continued after the year end, and an initial sampling and
mapping programme was undertaken at three of the properties also after the year end.
Hemlo-Schreiber / First Class Metals
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
In January 2021 the Company acquired the Hemlo North project, an early stage exploration opportunity
prospective for both gold and base metal mineralisation, situated over an underexplored part of the
very prospective Hemlo-Schreiber Greenstone Belt. Hemlo North consisted of 122 Single Cell Mining
Claims ("Claims") being vended as three contiguous claim packages; Roger Lake (50 Claims); Olga Lake
(42 Claims); and Dotted East (30 Claims), over a total area of 25.82km2.
The cost of acquisition of the Hemlo North project was CAD$120,000 (c.£69,130) of which CAD$60,000
(c.£34,565) was paid in cash and CAD$60,000 through the issue to the vendors of 1,152,233 new
Ordinary Shares of 0.1p each in the Company at an issue price of 3.0 pence per share.
Later in January 2021 the Company signed option agreements to acquire 4 further precious and base
metal exploration properties in the Hemlo-Schreiber region. The four option properties were located
within 100km west or southwest of the Company's Hemlo North project and included:
- McKellar, consisting of 58 Mining Claims (12.3km2) prospective for both volcanogenic massive
sulphide ("VMS") copper-lead-zinc mineralisation and orogenic gold deposits.
- Enable, consisting of 41 Single Cell Mining Claims (circa 8.7km2) and underlain by gold
prospective, greenstone belt.
- Magical, consisting of 14 Single Cell Mining Claims (circa 3km2) where regional geophysics
data show a possible target related to the intersection of a granitoid intrusion with a regional-
scale magnetic geophysics lineation.
- Coco East, consisting of 30 Single Cell Mining Claims (circa 6.4km2) considered prospective for
both mesothermal lode gold and VMS deposits.
For the acquisition of a 100% interest in the each of the option properties the following cash and equity
consideration was payable:
Property Name
Cash
POW Shares
(CAD$)
(CAD$)
Note: POW
Shares
Total
Consideration
(CAD$)
McKellar
50,000
50,000
960,000
100,000
Enable
30,000
30,000
576,000
60,000
Magical
20,000
20,000
384,000
40,000
Coco East
30,000
30,000
576,000
60,000
Total (if all
properties
acquired)
130,000
130,000
2,496,000
260,000
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
The POW shares payable as consideration were new Ordinary Shares of 0.1p each in the Company at
an issue price of 3.0 pence per share.
The Vendors will retain a 2% net smelter royalty ("NSR") in respect of each of the properties. Power
Metal may purchase 1% of each NSR for each property, at any time, by making a cash payment to the
Vendors of CAD$500,000 per Property.
The option over all four properties were exercised by the end of February 2021.
In September 2021, the Company announced the sale of all 5 projects to First Class Metals Limited
(“First Class”). First Class is a UK private company with an existing portfolio of interests in the
Schreiber-Hemlo region held through its Canadian operating subsidiary First Class Metals Inc., and is
currently seeking a listing on a recognised stock exchange in London.
The total consideration was £1 million payable through the issue of 333,334 new Ordinary Shares of
£1 each in First Class Metals Ltd ("First Class Shares") at a price of £3 per share.
New Opportunities
Power Metal Resources
Power Metal Resources had a pipeline of new opportunities under review during the year, some of
which led to new transactions as detailed above.
The Company maintains strict criteria for project selection and only proceeds with projects that
complement existing business interests and planned strategy and where transactions can be undertaken
on reasonable commercial terms.
Power Capital Investments Ltd
In May 2021 the Company announced it had established a new 100% owned subsidiary 'incubator'
business: Power Capital Investments Ltd ("Power Capital"). Power Capital will initially be fully funded
by Power Metal.
Power Capital will actively identify small, entrepreneurial business ventures with significant growth
potential in the junior resource space and provide support with regard to business management, project
development and corporate development to enable them to scale rapidly and realise their
potential. Power Capital may also provide financial support.
Power Capital will look to develop these high-potential early stage ventures, to the point of sale, public
listing, or incorporation into the Company's portfolio, dependent on a set of key performance indicators
to be established.
As a major shareholder in each selected business, Power Capital, and thereby Power Metal, has the
opportunity for significant capital appreciation from each successful venture together with a self-
created pipeline of new resource projects for operational development by Power Metal.
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Corporate Social Responsibility (“CSR”)
The Company maintains a focus on CSR through internal policies and our approach to external
operational activities.
The priority given to this aspect of our work is shown in the fact that at RRAL we recruited a community
relations officer as the second employee engaged, in order to start community engagement even in
advance of any license grant.
The Company will continue to prudently invest in the regions in which we have business activities, in
support of the communities where we operate. As an early stage Company, Power Metal Resources is
keen to employ workers from the areas in which we operate, and to operate in a safe, responsible, and
reasonable manner.
As certain projects mature, we would expect our community engagement to become more extensive in
line with the level of operational activities.
Financial Review
The Group recorded an audited loss after tax for the year to 30 September 2021 of £622k (2020: loss of
£1.4 million). The loss per share from continuing activities was 0.05p (2020: 0.25p).
The Group’s exploration activities during the financial year under review were funded through the
issue of shares to raise cash. In aggregate, new Ordinary Shares were issued during the financial year,
raising a total of approximately £3.6 million from the exercise of warrants, including by directors.
We ended the financial year with a cash balance of £1.27 million (2020: £0.91 million), which was
enhanced post-financial year end by the November 2021 placing, raising £1.05 million gross proceeds
through a placing of 60,000,000 new Ordinary Shares of 0.1 pence each, at an issue price of 1.75 pence
per share, and the exercise of warrants and options bringing an additional £593k into the Company
post-year end.
Cash balances held at the year end are supplemented by listed company shares and warrants (cash
equivalents), which represent a further pool of accessible cash available on the sale of shares in listed
companies.
Targets for 2022
Our operational targets for the remainder of 2022 are:
To advance our in-house exploration projects seeking to deploy capital primarily on exploration
drill programmes, targeting large scale metal discoveries;
To advance our spin out model, working to secure independent listings of multiple vehicles,
enabling the exploration packages that are spun out to thrive with independent management,
financing, strategy and operational drive whilst building Power Metal’s underlying asset value;
To secure further disposals of project portfolio interests to augment working capital, which
alongside the creation of spin out value will move the Company toward financial self-
sustainability;
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POWER METAL RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S REVIEW
FOR THE YEAR ENDED 30 SEPTEMBER 2021
To invest in, and focus on, Environmental, Social and Governance policies to protect and advance
the locations, people and opportunity of the jurisdictions in which we work; and
To focus on value creation from our existing portfolio of interests first and foremost, and to seek to
replenish that portfolio with new, vibrant and meaningful opportunities.
Board Changes
Andrew Bell stepped down from the Board as Executive Chairman on 30 September 2021, whilst
continuing to work with the Company in an advisory capacity for at least 12 months.
Outlook
The Directors believe Power Metal is now positioned better than at any time in its history, with 14
project packages across 3 continents, within 6 countries, and targeting 10 important metals. We have
within our portfolio opportunities targeting precious, base and strategic metals. The Directors believe
this provides our shareholders with a dynamic and broad spectrum of exposure to upside potential,
driven by wider junior resource sector sentiment, the forward supply/demand balance in the metals
market and notably, from the potential success of our exploration and corporate programmes.
Paul Johnson, Chief Executive Officer
2 March 2022
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POWER METAL RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Overview of the business
The financial year to 30 September 2021 resulted in a loss for the year of £622k (2020: loss of £1.4million).
Net assets at the year-end stood at £6.0 million (2020: £2.4 million). The Group’s cash position of £1.28
million as at 30 September 2021 was supplemented post-year end following a placing of 60,000,000 new
Ordinary Shares at an issue price of 1.75 pence, raising £1.05 million, and £482k has been raised since
the year end from exercise of options and warrants. In addition, the Group’s asset base is bolstered by
listed and unlisted shares and warrants in resource companies valued at circa £1.1 million at 30
September 2021.
Business Strategy
The overriding strategic objective of the Company is to make large scale metal discoveries. Power Metal
Resources has been structured with a portfolio model with diversity of interests by commodity,
jurisdiction and geology which is considered by the Company to increase the likelihood of a large scale
metal discovery.
The Company seeks to minimise fixed financial or operational commitments providing underlying
operational flexibility. This enables the financial and managerial resources to be focused forward on
the projects with the greatest potential to deliver the discoveries targeted.
Further information on the Group’s operations is set out in the Chief Executive Officer’s Review on
page 2 to 12.
Principal risks
Exploration risk
The Group’s business is mineral exploration and evaluation, which are speculative activities. There is
no certainty that Power Metal Resources will proceed to the development of any of its projects or
otherwise realise their full value. The Group aims to mitigate this risk when evaluating new business
opportunities by targeting areas of potential where there is at least some historical drilling or geological
data available and where leading exploration consultants believe there is strong evidence of high class
mineral deposits.
Resource risk
All mineral projects have risk associated with defined grade and continuity. Mineral Reserves and
Resources will be calculated by the Group in accordance with accepted industry standards and codes
but are always subject to uncertainties in the underlying assumptions which include geological
projection and commodity price assumptions. At present Power Metal Resources does not have projects
with quantified Mineral Reserves and Resources.
Environmental risk
Exploration of a project can be adversely affected by environmental legislation and the unforeseen
results of environmental studies carried out during evaluation of a project. The Group’s environmental
risk extends to the Group’s corporate and exploration interests in Australia, Botswana, Canada, The
DRC, Tanzania and the USA. Power Metal Resources will ensure proper measures are taken to assess
environmental risk including appropriate technical submissions to reporting authorities prior to work
Page 13
POWER METAL RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
commencing. Also, any disturbance to the environment during any exploration on any of the licence
areas will be rehabilitated in accordance with the prevailing local regulations.
Financing & liquidity risk
The Group has an ongoing requirement to fund its activities through the equity capital markets. There
is no certainty such funds will be available when needed. To date the Group has managed to raise the
required funds, primarily through equity placements, including placements undertaken during very
difficult market conditions of 2020/21 and monies from warrant exercises. However, the Directors have
prepared cash flow forecasts for at least the next 12 months from the date of this report and are
confident that the Company has sufficient financial resources to fund its operations.
From a wider perspective it is noted that the junior resource sector is cyclical, with peaks and troughs
in valuations of companies and generic sector confidence. The ease of financing follows this cyclicity
and that means the financing environment for junior companies can switch from challenging to
comfortable, and vice versa, quite quickly. The impact of cyclicity can be less significant for well-
respected companies with successful business models, and therefore the actual financing experience is
different for each company.
Political risk
All countries carry political risk that can lead to interruption of activity. Politically stable countries can
have enhanced environmental and social risks, risks of strikes and changes to taxation, whereas less
developed countries can have, in addition, risks associated with changes to the legal framework, civil
unrest and government expropriation of assets. The Company has working knowledge of the countries
in which it holds exploration licences and has appointed experienced local operators to assist the
Company in its activities in order to help reduce possible political risk.
Internal controls & risk management
The Directors are responsible for the Group’s system of internal financial control. Although no system
of internal financial control can provide absolute assurance against material misstatement or loss, the
Group’s system is designed to provide reasonable assurance that problems are identified on a timely
basis and dealt with appropriately. In carrying out their responsibilities, the Directors have put in place
a framework of controls to ensure as far as possible that ongoing financial performance is monitored in
a timely manner, that corrective action is taken and that risk is identified as early as practically possible,
and they have reviewed the effectiveness of internal financial control.
COVID-19 risk
In the current business climate, the Board acknowledges the COVID-19 pandemic risk and continues
to monitor the need to implement any changes to underpin the Group’s resilience to COVID-19, with
the key focus being on protecting all personnel, minimising the impact on critical workstreams and
ensuring business continuity.
Review of business and financial performance
The ongoing performance of the Company is managed and monitored using a number of key financial
and non-financial indicators (“KPIs”) on a monthly basis:
i. Cash position
Having sufficient cash for business operations is vital for an exploration company and cash
must be managed accordingly. The Directors review and manage the Group’s cash flow on a
monthly basis. The financial strategy is to ensure that, wherever possible, there are sufficient
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POWER METAL RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
funds to cover corporate overheads and exploration expenditure for as long a period as
possible. Power Metal Resources has confidence that financing of the Company can continue
as and when required, albeit the board is keen to avoid excessive dilution and will manage the
financing process with that objective in mind.
Furthermore, the Company has ensured that where possible it has built operational flexibility
in its corporate and exploration portfolio enabling expenditure to be paused should the
financing environment prove difficult and cash preservation prove essential.
ii. Exploration expenditure by project
The Company controls its exploration spend by project versus budget and in relation to its
available cash resources. If the results of exploration do not meet expectations, then budgeted
activities are re-evaluated or even cancelled. Evaluation of early stage projects is approached
in a cost effective way. The Group determines whether there are any indicators of impairment
of its exploration assets on an annual basis.
iii. Share price
The Company monitors its share price monthly versus a peer group of explorers. Many factors
outside the Company’s control can affect the share price but the Company appreciates that this
KPI is important to shareholders and the market in general in assessing the Company’s
performance.
Directors’ indemnities
The Group maintains directors’ and officers’ liability insurance providing appropriate cover for any
legal action brought against its Directors.
S172 Statement
The Board of Power Metal Resources is aware that the decisions we make may affect the lives of many
people. The Board makes a conscious effort to try and understand the interests of our stakeholders, and
to reflect them in the choices we make in creating long-term sustainable success for the business.
The Board views engagement with our shareholders and wider stakeholder groups as essential work.
We are aware that we need to listen to each stakeholder group, so that we can understand specific
interests, and foster effective and mutually beneficial relationships. By understanding our stakeholders,
we can build their needs into the decisions we take.
Throughout this Annual Report, we provide examples of how we:
Foster relationships with stakeholders;
- Consider the likely consequences of long-term decisions;
-
- Understand our impact on our local community and the environment; and
- Demonstrate the importance of behaving responsibly.
This section serves as our section 172 statement and should be read in conjunction with the Strategic
Report and the Company’s Corporate Governance Statement. Section 172 of the Companies Act 2006
(CA) requires Directors to act in a way that they consider, in good faith, would most likely promote the
success of the Company for the benefit of its members as a whole, taking into account the following
factors (among others) listed in S172:
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POWER METAL RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
(a) the likely consequences of any decision in the long term,
(b) the interests of the company's employees,
(c) the need to foster the company's business relationships with suppliers, customers and others,
(d) the impact of the company's operations on the community and the environment,
(e) the desirability of the company maintaining a reputation for high standards of business conduct,
and
(f) the need to act fairly as between members of the company.
The Directors continue to have regard to the interests of the Company’s employees and other
stakeholders, including the impact of its activities on the community, the environment and
the Company’s reputation, when making decisions. Acting in good faith and fairly between members,
the Directors consider what is most likely to promote the success of the Company for its members in
the long term.
Due to the unprecedented global impacts of Governmental responses to COVID-19, the Company has
continually re-assessed and analysed its business strategy with the key focus being minimising the
impact on critical work streams, ensuring business continuity and conserving cash flows. As such,
active stakeholder engagement and open communication have become increasingly important in
decision making for the Board. Specific decisions taken during the year following consultations with
key stakeholders include:
-
- An intensification of investment community engagement through social media and through
online interaction with shareholders and investors to compensate for the reduced opportunities
for face to face engagement;
The decision to recruit a local community relations officer at the Red Rock Australasia Pty Ltd joint
venture at an early stage to engage with local communities, including special interest groups,
lobbyists, farmers, and residents, and to address environmental concerns, to compensate for the
travel restrictions preventing key management from travel to the area;
The issue of shares and options to service providers and options to directors in order to create long
term incentives, align their interests with those of the members and conserve cash through the
period of uncertainty during the earlier part of the accounting period.
-
The Board regularly reviews our principal stakeholders and how we engage each group. The
stakeholder voice is brought into the boardroom throughout the annual corporate cycle through
information provided by management and also by direct engagement with stakeholders themselves,
including shareholder interviews and question and answer sessions with the Chief Executive Officer.
The relevance of each stakeholder group may increase or decrease depending on the matter or issue in
question, so the Board seeks to consider the needs and priorities of each stakeholder group during its
discussions and as part of its decision making.
The table below acts as our s172(1) statement by setting out the key stakeholder groups, their interests
and how Power Metal Resources has engaged with them over the reporting period. However, given
the importance of stakeholder focus, long-term strategy and reputation, these themes are also discussed
throughout this Annual Report.
Page 16
POWER METAL RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Stakeholder
Their interests
How we engage
Investors
Business sustainability
High standards of governance
Comprehensive review of financial
performance of the business
Success of the business
Ethical behaviour
Interim and Annual Report
Investor Relations section on
Company website
RNS announcements
Trading updates
Shareholder circulars
the
Awareness of long-term strategy and
direction
Improving market perception of the
business
Delivering
term value
long
to
AGM
Press releases
Media articles and interviews
Board encourages open dialogue with
the Company’s investors
Regulatory
bodies
shareholders
Compliance with regulations
Worker pay and conditions
Health and Safety
Brand reputation
Waste and environment
Insurance
Environmental protection
Environment
Sustainability
Energy usage
Community
Recycling
Waste Management
Community outreach
Human Rights
Sustainability
Company website
Stock exchange announcements
Annual Report
Direct contact with regulators
Compliance updates at Board Meetings
Consistent risk review
Oversight of corporate responsibility
plans
Adhere to local guidelines
Meeting with
representatives
key
community
Partnering with the communities in
which we operate – sharing plans/ideas
for discussion
Contractors
Terms and conditions of contract
Anti-Bribery Policy
Health and safety
Human rights and modern slavery
Paul Johnson, Chief Executive Officer
2 March 2022
Page 17
POWER METAL RESOURCES PLC
BOARD OF DIRECTORS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Paul Johnson, Chief Executive Officer
Paul Johnson holds a degree in Management Science from the University of Manchester Institute of
Science and Technology and is a Chartered Accountant, Chartered Loss Adjuster and Associate of the
Chartered Insurance Institute. Paul is the Chief Executive Officer of Value Generation Limited, a family
investment and advisory company focused on the natural resource and related fintech sectors.
Paul Johnson is an experienced public company director and has previously been Chief Executive
Officer of Metal Tiger plc (AIM), Metal NRG plc (Aquis, formerly NEX) and China Africa Resources
plc (AIM). He has been Chairman of ECR Minerals plc (AIM) and Non-Executive Director of Greatland
Gold plc (AIM), Papua Mining plc (AIM), Thor Mining plc (AIM) and Armadale Capital (AIM).
Scott Richardson Brown, Interim Non-Executive Chairman
Scott is a Fellow of the Institute of Chartered Accountants in England and Wales. He began his career
at Coopers & Lybrand (later PricewaterhouseCoopers) in the banking and capital markets division, he
later became a partner in the corporate broking/finance division of Oriel Securities Limited covering a
range of sectors.
Since leaving Oriel Securities Limited, Scott has held a number of directorships of AIM-quoted
companies operating within the natural resources sector in both CEO, CFO and Non-Executive Director
roles and specialises in restructuring and turning around companies in difficulty.
Ed Shaw, Non-Executive Director
Ed started his career 25 years ago at Citibank having studied Chemistry at the University of Bristol. Ed
was one of the founding partners of Newpeak Capital LLP in 2007 and has a long history of trading
and more recently raising capital for companies in the mining sector including microcap resource
stocks, the area of the market in which POW is currently positioned.
Ed complements the existing team and helps strengthen the Board particularly by adding weight to the
Company’s financing strategy, a key element of business management for listed microcaps.
Page 18
POWER METAL RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
The Directors present their report together with the audited consolidated financial statements of Power
Metal Resources plc (the “Company”), together with:
its 100% owned subsidiary, Golden Metal Resources Ltd (“GMR”);
its 100% owned subsidiary, First Development Resources Ltd (“FDR”);
its 100% owned subsidiary, Power Capital Investments Ltd (“PCI”);
its 100% owned subsidiary, Tati Greenstone Resources Pty Ltd (“TGR”);
its 100% owned subsidiary, Power Metal Resources Botswana Pty Ltd (“PMRB”);
its 100% owned subsidiary, Power Metal Resources Australia Pty Ltd (“PMRA”);
its 100% owned subsidiary, Power Metal Resources Canada Inc (“PMRC”);
the 70% owned Power Metal Resources SA (formerly ABM Kobald SAS), (“PMRSA”), incorporated
in the DRC, in which its 70% interest in the Kisinka licence is held.
its 100% owned subsidiary, Regent Resources Interests Corporation (“RRIC”); and
its 100% owned subsidiary, Colbalt Blue Holdings Inc (“CBH”).
The Group’s focus is metals exploration and development with a focus currently on precious metals
exploration in North America and Australia together with base and strategic metals exploration in
Africa.
Results
The Group reports a loss after tax of £622k (2020: loss of £1.4 million) for the year ended 30 September
2021.
Major events after the reporting date
For information regarding events after the reporting date, see note 25 to the financial statements.
Dividends
The Directors do not recommend the payment of a dividend for the year ended 30 September 2021
(2020: £nil).
Financial risk management
The Group’s operations are exposed to a variety of financial risks and these are detailed in note 23 to
these financial statements.
Political donations
There were no political donations during the year ended 30 September 2021 (2020: £nil).
Bribery legislation
The Directors have adopted appropriate procedures to ensure compliance with the Bribery Act 2010.
Directors
The Directors of the Company who served during the year and since the reporting date are as follows:
A Bell, Executive Chairman (resigned 30 September 2021)
P Johnson, Chief Executive Officer
S Richardson Brown, Non-executive Director
E Shaw, Non-executive Director
Page 19
POWER METAL RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Directors’ interests
The beneficial interests of the Directors holding office at the end of 30 September 2021 in the issued
share capital of the Company as at 30 September 2021 were as follows:
Percentage of issued
ordinary share
capital
P Johnson*
6.02%
S Richardson Brown
-
1.12%
E Shaw
* Includes 7,000,000 ordinary shares held by his wife, Michelle Johnson, and 59,500,000 held by Value Generation Ltd, a company
beneficially owned by Paul Johnson
Number of ordinary
shares of 0.1p each
75,000,000
-
14,000,000
Details of share options and warrants granted to Directors are disclosed in note 20 to the financial
statements.
Directors’ remuneration and service contracts
Details of Directors’ emoluments including share-based payments are disclosed in note 8 to the
financial statements.
A Bell
(Resigned 30.9.21)
P Johnson
I Macpherson (Resigned
3.9.20)
S Richardson Brown
E Shaw
Total
Short-term benefits
Salary/fees
£’000
48
Bonus
£’000
51
Total 2021
£’000
99
Total 2020
£’000
78
80
-
18
18
164
86
-
13
13
163
166
-
31
31
327
131
19
31
21
280
There were 3 employees other than the Directors in the year ended 30 September 2021.
Directors’ indemnities
The Group maintains directors’ and officers’ liability insurance providing appropriate cover for any
legal action brought against its Directors.
Going concern
The financial statements are prepared on a going concern basis. In assessing whether the going concern
assumption is appropriate, the Directors have taken into account all relevant available information
about the current and future position of the Group, including current level of resources and the
required level of spending on exploration and corporate activities. As part of their assessment, the
Directors have also taken into account the potential for continuing warrant exercises and the ability to
raise new funding whist maintaining an acceptable level of cash flows for the Group to meet all
commitments.
The Directors have stress tested the Group’s cash projections, which involves preserving cash flows
and adopting a policy of minimal cash spending for a period of at least 12 months from the date of
approval of these financial statements. The Directors believe the measures they have available will
result in sufficient working capital and cash flows to continue in operational existence. Taking these
Page 20
POWER METAL RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
matters in consideration, the Directors continue to adopt the going concern basis of accounting in the
preparation of the financial statements.
The financial statements do not include the adjustments that would be required should the going
concern basis of preparation no longer be appropriate.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial period. Under
that law the Directors have elected to prepare the financial statements in accordance with international
accounting standards in conformity with the Companys Act 2006. The financial statements are required
by law to give a true and fair view of the state of affairs of the Company and the Group and of the
Group’s results for that period.
select suitable accounting policies and then apply them consistently;
In preparing these financial statements, the Directors are required to:
make judgements and estimates that are reasonable and prudent;
state whether the financial statements comply with international accounting standards in
conformity with the Companys Act 2006; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company to enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Statement of disclosure to auditor
So far as the Directors are aware:
all the Directors have taken the steps that they ought to have taken to make themselves aware of
any relevant audit information and to establish that the auditor is aware of that information.
there is no relevant audit information of which the Company’s auditor is unaware; and
Auditor
PKF Littlejohn LLP have expressed their willingness to continue in office and a resolution will be
proposed at the annual general meeting to reappoint PKF Littlejohn LLP as auditor for the next financial
year.
By order of the Board
Paul Johnson, Chief Executive Officer
2 March 2022
Page 21
POWER METAL RESOURCES PLC
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
As Chairman of the Board of Directors of Power Metal Resources plc (Power Metal), (Company),
(Group), it is my responsibility to ensure that the Company has both sound corporate governance and
an effective Board. As Chairman of the Company, my responsibilities include leading the Board
effectively, overseeing the Company’s corporate governance model, and ensuring that good
information flows freely between Executives and Non-Executives in a timely manner. The Chairman’s
principal responsibility is to ensure that the Company and its Board are acting in the best interests of
shareholders.
This report follows the structure of the Quoted Companies Alliance Corporate Governance (“QCA
Code”) guidelines and explains how we have applied the guidance. The Board considers that the Group
complies with the QCA Code so far as it is practicable having regard to the size, nature and current
stage of development of the Company, and areas of non-compliance are disclosed in the text below.
Further details of the Company’s compliance with the QCA Code can be found on the Company’s
Corporate Governance page on the website (https://www.powermetalresources.com/corporate-
governance), and any areas of non-compliance will be disclosed in the text below.
The Board understands that application of the QCA Code supports the Company’s medium to long-
term success whilst simultaneously managing risks and providing an underlying framework of
commitment and transparent communications with stakeholders.
Strategy and Risks
A description of the Company’s business model and strategy can be found on page 13, and the key
challenges executing the Company’s strategy can be found on page 13 to 14.
The Board has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The Group’s risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks in a timely
manner. The Board ensures that corrective action is taken and that risks are identified as early as
practically possible, as well as being responsible for reviewing the effectiveness of internal financial
controls. Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and the Group’s activities. Although no system of internal financial control can provide
absolute assurance against material misstatement or loss, the Group’s systems are designed to provide
reasonable assurance that problems are identified on a timely basis and dealt with appropriately. In
addition, members of the Board attend industry conferences and seminars to keep abreast of sector
risks and industry changes.
The Audit Committee (as well as the Board as a whole) reviews reports from the Company’s auditors
relating to the internal control systems in use throughout the Group in order to determine the adequacy
and efficiency of internal control and risk management systems. An internal audit function is not yet
considered necessary as day to day control is sufficiently exercised by the Company’s Executive
Directors. However, the Board will continue to monitor the need for an internal audit function.
Page 22
POWER METAL RESOURCES PLC
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Shareholder needs and expectations
Power Metal Resources places a great deal of importance on communication with its stakeholders and
is committed to establishing constructive relationships with investors and potential investors in order
to assist it in developing an understanding of the views of its shareholders. The Company seeks to
provide effective communication through Interim and Annual Reports, along with Regulatory News
Service announcements on the Company’s website, www.powermetalresources.com and active
engagement including CEO interviews and Q&A sessions with a range of social and investor-oriented
media. The Company also has a News Archive section on the website, enabling investors to easily
access a range of archived reports and previous updates, as well as a Shareholder Circulars page which
includes key business and corporate governance updates. For the year under review, in order to
improve shareholder communications, the Board has provided regular updates to shareholders on the
progress of the Company’s projects through RNS announcements and on its website.
Power Metal Resources is committed to maintaining a healthy dialogue between the Board and all of
its shareholders to enable shareholders to come to informed decisions about the Company. This is
achieved through formal meetings such as the AGM, which typically provides an opportunity to meet,
listen and present to shareholders, and shareholders are encouraged to attend. The Company is open
to receiving feedback from key stakeholders and will take action where appropriate. The key contact
for shareholder liaison is Paul Johnson, who meets with shareholders as and when requested.
Information on the Investors section of the Company’s website is kept up to date and contains details
of relevant developments, interviews, presentations and key reports.
The Company also engages the services of external media service providers who assist with Power
Metal Resources’ public and investor relations, ensuring information is accessible to stakeholders and
released in a timely and informative manner. These advisers also seek to encourage and facilitate
shareholder engagement.
The Board
The Company’s Board includes Directors from a range of industries including the accounting and
finance, and natural resources sectors. The Company believes that the current balance of skills in the
Board as a whole reflects a very broad range of personal, commercial and professional capabilities,
providing the ability to deliver the Company’s strategy for the benefit of shareholders over the medium
and long-term.
The Board currently comprises one Executive Director, Paul Johnson and two Non-Executive Directors,
Scott Richardson Brown and Ed Shaw. Scott Richardson Brown is acting as interim Chairman.
Ed Shaw is employed by the Company’s joint broker, First Equity, and, as such, the Company does not
consider him to be an Independent Non Executive Director in accordance with the QCA code. Scott
Richardson Brown is considered to be an Independent Non Executive Director. As at 30 September
2021, Scott Richardson Brown has an interest in 6,000,000 options. Neither Mr Richardson Brown nor
the Company believe that his interests are significant in assessing his independence.
Page 23
POWER METAL RESOURCES PLC
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
The Board notes that the QCA recommends that there be two Independent Non-Executive Directors,
and that the Chairman be Independent. Therefore, the Board acknowledges that, at its current stage of
development, it does not comply with Principle 5 of the QCA Code, although the Board notes that the
Chairman and Non-Independent Director both have significant experience in building successful
businesses and offer key expertise to the Executive Directors thus benefitting the Company as a whole.
Furthermore, the Board maintains that its composition will be frequently reviewed as the Company
develops.
Mr Paul Johnson worked for 329 days per year and Mr Andrew Bell worked for 162 days of the year
until his resignation on 30 Septemer 2021. Mr Scott Richardson Brown and Mr Ed Shaw worked for not
less than 24 days per year. Biographical details of the Directors can be found on page 18.
During the financial year but since the business restructuring in 2020, there were 7 routine Board
Meetings and 23 non-routine Board Meetings, and the attendance of each director is outlined below:
Director
Andrew Bell*
Paul Johnson
Scott Richardson Brown
Ed Shaw
* resigned 30 September 2021
Routine Board Meetings
Non-Routine Board Meetings
7
7
6
6
23
23
16
16
Advisors
ONE Advisory Limited has been contracted by the Company to act as Power Metal’s Company
Secretary and has been given the responsibility for ensuring that Board procedures are followed and
that the Company complies with all applicable rules, regulations and obligations governing its
operation, including assistance with Board and shareholder meetings and Market Abuse Regulations
(“MAR”) compliance. ONE Advisory Limited also supports the Board in its development of the
Company’s corporate governance responsibilities, assisting with the Company’s application of the
QCA Code and in relation to AIM Rule 26 disclosures.
The Company’s Nominated Adviser is consulted on all matters. The Company took advice on general
corporate plc management, potential & actual acquisitions, changes to board composition and business
strategy.
All Directors have access to independent professional advice, if required.
Board Evaluation
The Directors consider that the Company and Board are not yet of a sufficient size for a full Board
evaluation to make commercial and practical sense. Therefore, the Board accepts that the Company
does not comply with this aspect of the QCA Code, although in frequent Board meetings/calls, the
Directors can discuss any areas where they feel a change would be beneficial for the Company, and the
Company Secretary remains on hand to provide impartial advice. As the Company grows, it intends to
expand the Board and, with expansion, re-consider the need for a formal Board evaluation.
Page 24
POWER METAL RESOURCES PLC
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Culture
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of
the Company as a whole and that this will impact the performance of the Company. The Board is aware
that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole.
The corporate governance arrangements that the Board has adopted are designed to ensure that the
Company delivers long-term value to its shareholders, and that shareholders have the opportunity to
express their views and expectations for the Company in a manner that encourages open dialogue with
the Board. The Board also ensures that communities within the regions that the Company operates
within continue to be supported, being cognisant of the Company’s pledge to Corporate Social
Responsibility.
A large part of the Company’s activities is centred upon an open and respectful dialogue with
shareholders, contractors, regulators and other stakeholders. Therefore, the importance of sound
ethical values and behaviours is crucial to the ability of the Company to successfully achieve its
corporate objectives. The Board places great importance on this aspect of corporate life and seeks to
ensure that this flows through all that the Company does. The Directors consider that at present the
Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive
and constructive challenge.
Audit Committee
The Audit Committee comprises Scott Richardson Brown and Ed Shaw and is chaired by Scott
Richardson Brown. The Audit Committee is responsible for ensuring that the financial performance,
position and prospects of the Group are properly monitored and reported on and for meeting with the
auditor and reviewing audit reports relating to the Company’s accounts. The Audit Committee is
required to report formally to the Board on its proceedings after each meeting on all matters for which
it has responsibility. The audit committee met once during the year under review.
Remuneration Committee
The Remuneration Committee comprises Scott Richardson Brown and Edmund Shaw, and is chaired
by Scott Richardson Brown, a qualified chartered accountant. The Committee is responsible for the
review and recommendation of the scale and structure of remuneration for senior management,
including any bonus arrangements or the award of share options with due regard to the interests of
shareholders and the performance of the Company.
The Board notes that additional information supplied by the Audit Committee and by the
Remuneration Committee has been disseminated across the whole of this Annual Report, rather than
included as separate Committee Reports.
Major events after the reporting date
For information regarding events after the reporting date, see note 25 to the financial statements.
Shareholder Engagement
The Board is committed to maintaining effective communication and having constructive dialogue with
its shareholders and other relevant stakeholders. The Company intends to have ongoing relationships
with both its private and institutional shareholders (through meetings and presentations), and for them
to have the opportunity to discuss issues and provide feedback at meetings with the Company.
Page 25
POWER METAL RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF POWER METAL RESOURCES PLC
Opinion
We have audited the financial statements of Power Metal Resources Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 30 September 2021 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Parent Company Statement of Financial
Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated
and Parent Company Statements of Cash Flows and notes to the financial statements, including
significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and international accounting standards in conformity with the
requirements of the Companies Act 2006 and as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 30 September 2021 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006;
the parent company financial statements have been properly prepared in accordance with
international accounting standards in conformity with the requirements of the Companies Act
2006 and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the group’s and parent company’s ability to continue to adopt the going
concern basis of accounting included:
• Challenging the directors’ forecasts prepared to assess the group’s and parent company’s
ability to meet its financial obligations as they fall due for a period of at least 12 months from
the date of approval of the financial statements. We have reviewed the consistency of
committed cash flows against contractual arrangements and historic information and
compared general overheads to current run rates.
Identifying and evaluating subsequent events which impact upon going concern, comprising
the equity fund raise and proceeds from the exercise of warrants.
•
Page 27
POWER METAL RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF POWER METAL RESOURCES PLC
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group's or
parent company’s ability to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
Our application of materiality
We apply the concept of materiality in both planning and performing the audit, and in evaluating the
effect of misstatements. At the planning stage, materiality is used to determine the financial statements
areas that are included within the scope of the audit and the extent of the sample sizes during the audit.
The materiality applied to the group financial statements was £127,000 (2020: £72,900), based on 2% of
gross assets, as it is from these assets that the group seeks to deliver returns for shareholders, in
particular the value of exploration and development projects and financial assets the group is interested
in. A separate materiality was set for the group statement of comprehensive income items to obtain
sufficient coverage of the expenditure in the year. The materiality applied was £27,000, based on 5% of
the loss for the year adjusted for non-recurring items.
Performance materiality has been set at 70% (2020: 70%) of headline materiality, and the threshold for
which we communicate errors to management has been set at 5% of headline materiality. We also
agreed to report any other audit misstatements below that threshold that we believe warranted
reporting on qualitative grounds.
Materiality for the parent entity has been set at £126,500 (2020: £72,000) using the basis of gross assets
and, with a separate materiality for the statement of comprehensive income of £26,500, based on 5% of
the loss for the year adjusted for non-recurring items.
Materiality has been reassessed at the closing stages of the audit, taking into consideration new
information which arose. No alterations were made to materiality either during or at the conclusion of
the audit.
Our approach to the audit
In designing our audit, we looked at areas which deemed to involve significant judgement and
estimation by the directors, such as the key audit matters surrounding the carrying value of intangible
assets, and the classification and valuation of investment and financial assets balances. The remaining
significant judgemental area surrounded the valuation of share-based payments. We also addressed
the risk of management override of controls, including consideration of whether there was evidence of
bias that represented a risk of material misstatement due to fraud.
Work on all significant components of the group has been performed by us as group auditor.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial
Page 28
POWER METAL RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF POWER METAL RESOURCES PLC
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key Audit Matter
How our scope addressed this matter
Carrying value of intangible exploration and
evaluation assets (Note 10)
The Group and Company hold material
intangible assets relating to capitalised costs in
respect of mineral exploration projects.
There is a risk that impairment indicators exist
which would result in an impairment of the
year end intangible assets balance.
The Directors consider each asset to assess
whether there are indicators of impairment by
considering the potential resources available
from
evaluation work
and
undertaken, together with the availability of
finance to further evaluate the exploration
rights.
exploration
As a result of this evaluation, the Directors have
recognised an impairment charge of £155,584 to
intangible assets in respect of the carrying
value of Power Metal Resources SA, which held
the Kisinka Copper-Cobalt Project during the
year.
Our work in this area included:
Holding discussions with management
and evaluating the development of the
projects during the year, and
subsequent to the year end, for
evidence of impairment indicators in
accordance with IFRS 6;
Obtaining and reviewing applicable
correspondence and license agreements
to ensure transactions are accounted for
in accordance with the terms therein;
Confirming good title to the projects
exists as at the year-end;
Evaluating, and providing challenge to,
management’s impairment assessment;
and
Reviewing the disclosures in the
financial statements, including those
relating to estimates and judgements
used, and evaluating their
completeness.
We found the judgements used by the Directors
in their impairment assessment were reasonable.
Classification and valuation of investments (in
subsidiaries, associates, joint ventures and
other financial assets) (Notes 11, 12, 13 and 14)
Investments in subsidiaries (Company), as
Our work in this area included:
well as joint ventures, associates and equity
investments as financial assets (Group &
Confirming ownership and good title in
respect of all investments within the
Company), and non-current assets held for sale
Group;
(Group & Company) are the most significant
For financial assets, reviewing
balances in the financial statements.
accounting entries made during the
year and at year end in respect of fair
Page 29
POWER METAL RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF POWER METAL RESOURCES PLC
There is a risk that the requirements of IAS 28,
value movements and vouching to
IFRS 9, IFRS 10, IFRS 5 and IFRS 11 have not
supporting documentation;
been applied correctly, and that investment
balances have been inappropriately classified
and recorded in the financial statements.
Given the early stage exploration activities in
these entities, existence of losses and potential
delays in advancing developments at the
underlying projects depending on
the
availability of funding to meet minimum
expenditure and earn-in commitments, there is
a risk that the investment balances are not fully
recoverable.
Considering the criteria within IAS 28
Investments in Associates and Joint
Ventures and determining whether the
accounting treatment of the JV entities
is in accordance with the standard,
including corroboration to relevant
supporting documentation and
agreements – taking into consideration
percentage ownership, Board
representation as well as any
indications of significant influence,
control, or joint control;
Considering the classification criteria
within IFRS 5 ‘Non-Current Assets
Held for Sale and Discontinued
Operations’ and concluding as to
whether the accounting treatment is
appropriate for the material balance
reclassified during the year, based on
conditions existing at the balance sheet
date (i.e. whether a sale is highly
probable within 12 months of the year-
end);
Considering whether the asset classified
as held for sale is held at an appropriate
carrying value in accordance with IFRS
5, being the lower of fair value less costs
to sell and carrying amount;
Considering the recoverability of
investments by reference to underlying
net asset values, including the
recoverability potential of the
underlying exploration projects by
reference to IFRS 6;
Obtaining and reviewing Board
impairment papers in respect of
investments, providing appropriate
Page 30
POWER METAL RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF POWER METAL RESOURCES PLC
challenge and corroboration for any key
assumptions made; and
Reviewing disclosures made in the
financial statements in accordance with
IFRS 5, IAS 28 and IFRS 9 and ensuring
these are complete and in accordance
with the applicable standard.
We found the judgements used by the Directors
in their basis of classification and valuation were
reasonable.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report. Our opinion on the group and parent company financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
Page 31
POWER METAL RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF POWER METAL RESOURCES PLC
adequate accounting records have not been kept by the parent company, or returns adequate
for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and
returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of directors’ responsibilities, the directors are responsible for
the preparation of the group and parent company financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the group and parent company financial statements, the directors are responsible for
assessing the group and the parent company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
We obtained an understanding of the group and parent company and the sector in which they
operate to identify laws and regulations that could reasonably be expected to have a direct
effect on the financial statements. We obtained our understanding in this regard through
discussions with management and our experience of the resource exploration sector.
We determined the principal laws and regulations relevant to the company in this regard to be
those arising from
o Companies Act 2006;
o AIM Rules;
o Local tax and employment law; and
o Local environmental and mining regulations.
Page 32
POWER METAL RESOURCES PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF POWER METAL RESOURCES PLC
We designed our audit procedures to ensure the audit team considered whether there were
any indications of non-compliance by the company with those laws and regulations. These
procedures included, but were not limited to:
o Enquires of management
o Review of Board minutes
o Review of legal expenses
o Review of R S announcements
We also identified the risks of material misstatement of the financial statements due to fraud.
We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that the estimates, judgements and assumptions applied by
management in the assessment of impairment of intangible assets and the fair value of
investment balances gave the greatest potential for management bias.
We addressed the risk of fraud arising from management override of controls by performing
audit procedures which included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law or regulation is removed from the
events and transactions reflected in the financial statements, as we will be less likely to become aware
of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud
rather than error, as fraud involves intentional concealment, forgery, collusion, omission or
misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council's website at: www.frc.org.ukIauditorsresponsibilities.This description forms
part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in an auditor's report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
2 March 2022
15 Westferry Circus
Canary Wharf
London E14 4 D
Page 33
POWER METAL RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Revenue
Gross profit
Operating expenses
Impairment
Fair value gains through profit or loss
Loss from operating activities
Share of post-tax losses of equity accounted joint ventures
Loss before tax
Taxation
Note
6
10
15
12
9
2021
£’000
37
37
(847)
(156)
445
(521)
(102)
(623)
-
2020
£’000
9
9
(835)
(970)
415
(1,390)
(33)
(1,414)
-
Loss for the year from continuing operations
(623)
(1,414)
Other comprehensive income
Items that will or may be reclassified to profit or loss;
Exchange translation
Total other comprehensive income/(expense)
1
1
(2)
(2)
Total comprehensive expense for the year
(622)
(1,416)
Loss for the period attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive loss attributable to:
Owners of the parent
Non-controlling interests
(592)
(31)
(623)
(591)
(31)
(622)
(1,381)
(33)
(1,414)
(1,349)
(67)
(1,416)
Earnings per share from continuing operations attributable to
the ordinary equity holder of the parent:
Basic and diluted loss per share (pence)
19
(0.05)
(0.25)
The notes on pages 43 to 80 are an integral part of these financial statements
Page 34
POWER METAL RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
30 September
2021
£’000
30 September
2020
£’000
Note
Assets
Intangible assets
Investments in associates and joint ventures
Financial assets at fair value through
profit or loss
Property, plant and equipment
Non-current assets
Financial assets at fair value through
profit or loss
Assets classified as held for sale
Trade and other receivables
Cash and cash equivalents
Current assets
Total assets
Equity
Share capital
Share premium
Shares to be issued
Capital redemption reserve
Share based payment reserve
Exchange reserve
Accumulated losses
Total
Non-controlling interests
Total equity
Liabilities
Trade and other payables
Deferred consideration
Current liabilities
Total liabilities
10
12
15
15
14
16
17
18
20
21
22
800
166
3,527
2
4,495
179
153
175
1,281
1,788
6,283
7,705
18,437
-
5
1,541
72
(21,488)
6,272
(306)
5,966
317
-
317
317
156
284
1,208
-
1,648
-
-
110
913
1,023
2,671
7,286
14,910
22
5
1,286
71
(20,911)
2,669
(275)
2,394
161
116
277
277
Total equity and liabilities
6,283
2,671
The financial statements of Power Metal Resources plc, company number 07800337, were approved by
the board of Directors and authorised for issue on 2 March 2022. They were signed on its behalf by:
Paul Johnson
Chief Executive Officer
The notes on pages 43 to 80 are an integral part of these financial statements
Page 35
POWER METAL RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2020
Share
capital
£‘000
Share
premium
£‘000
Shares
to be
issued
£’000
Capital
Redemption
Reserve
Share
based
payment
Reserve
Exchange
reserve
Retained
deficit
£’000
£’000
£’000
£‘000
Non-
Controlling
Interests
£‘000
Total
Equity
£‘000
Total
£‘000
Balance at 1 October 2019
6,843
13,228
Loss for the period
Other comprehensive
income/(expense)
Total comprehensive income /
(expense) for the period
Issue of ordinary shares
Costs of share issues
Share-based payments
Total transactions with owners
-
-
-
443
-
-
443
-
-
-
1,768
(86)
-
1,682
Balance at 30 September 2020
7,286
14,910
-
-
-
-
22
-
-
22
22
5
1,195
39
(19,530)
1,780
(208)
1,572
-
-
-
-
-
-
-
-
-
-
-
-
91
91
-
32
32
-
-
-
-
(1,381)
(1,381)
-
32
(33)
(34)
(1,414)
(2)
(1,381)
(1,349)
(67)
(1,416)
-
-
-
-
2,233
(86)
91
2,238
-
-
-
-
2,233
(86)
91
2,238
5
1,286
71
(20,911)
2,669
(275)
2,394
The following describes the nature and purpose of each reserve:
Share Capital: Amount subscribed for share capital at nominal value.
Shares to be issued: Amount subscribed for share capital not yet issued at the reporting date.
Share based payment reserve: Amounts recognised for the fair value of share options and warrants granted.
Non-controlling interests: Cumulative net profits/(losses) and exchange differences in relation to non-controlling interests.
Retained profits/(losses): Cumulative net profits/(losses) recognised in the financial statements.
Share Premium: Amount subscribed for share capital in excess of nominal value.
Capital Redemption Reserve: Amounts relating to the purchase of Company’s own shares.
Exchange Reserve: Foreign exchange differences in re-translation.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 36
POWER METAL RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Share
capital
£‘000
Share
premium
£‘000
Shares
to be
issued
£’000
Capital
Redemption
Reserve
Share
based
payment
Reserve
Exchange
reserve
Retained
deficit
£’000
£’000
£’000
£‘000
Non-
Controlling
Interests
£‘000
Total
Equity
£‘000
Total
£‘000
Balance at 1 October 2020
7,286
14,910
22
5
1,286
71
(20,911)
2,669
(275)
2,394
Loss for the period
Other comprehensive income
Total comprehensive income /
(expense) for the period
Adjustment for previous year
Issue of ordinary shares
Costs of share issues
Share-based payments
Warrant exercises
Total transactions with owners
-
-
-
(19)
438
-
-
-
419
-
-
-
19
3,546
(38)
-
-
3,527
-
-
-
-
(22)
-
-
-
(22)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
270
(15)
255
-
1
1
-
-
-
-
-
-
(592)
-
(592)
1
(592)
(591)
-
-
-
-
15
-
-
3,962
(38)
270
-
4,194
(31)
-
(31)
-
-
-
-
-
(623)
1
(622)
-
3,962
(38)
270
-
4,194
Balance at 30 September 2021
7,705
18,437
-
5
1,541
72
(21,488)
6,272
(306)
5,966
The following describes the nature and purpose of each reserve:
Share Capital: Amount subscribed for share capital at nominal value.
Shares to be issued: Amount subscribed for share capital not yet issued at the reporting date.
Share based payment reserve: Amounts recognised for the fair value of share options and warrants granted.
Non-controlling interests: Cumulative net profits/(losses) and exchange differences in relation to non-controlling interests.
Retained profits/(losses): Cumulative net profits/(losses) recognised in the financial statements.
Share Premium: Amount subscribed for share capital in excess of nominal value.
Capital Redemption Reserve: Amounts relating to the purchase of Company’s own shares.
Exchange Reserve: Foreign exchange differences in re-translation.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 37
POWER METAL RESOURCES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 SEPTEMBER 2021
Cash flows used in operating activities
Loss for the year
Adjustments for:
Fair value adjustments
Share of post-tax losses of equity accounted joint
ventures
Impairment
Expenses settled in shares
Share-based payment expense
Foreign exchange differences
Changes in working capital:
(Increase) in trade and other receivables
Increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Purchase of intangibles
Purchase of financial assets at fair value through
profit or loss
Investment in joint ventures
Proceeds from investment disposals
Purchase of property, plant and equipment
Net cash outflows from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Issue costs
Net cash inflows from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at 30 September
2021
£’000
(623)
(445)
102
156
-
270
1
(539)
(181)
156
(564)
(528)
(2,184)
(256)
261
(2)
(2,709)
3,679
(38)
3,641
368
913
1,281
2020
£’000
(1,414)
(415)
33
970
267
91
(2)
(470)
(78)
95
(453)
-
(504)
(201)
20
-
(685)
1,965
(85)
1,880
742
171
913
The notes on pages 43 to 80 are an integral part of these financial statements
Page 38
POWER METAL RESOURCES PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
Assets
Investments in subsidiaries
Investments in joint ventures
Intangible assets
Financial assets at fair value through profit or loss
Property, plant and equipment
Non-current assets
Financial assets at fair value through profit or loss
Assets classified as held for sale
Trade and other receivables
Cash and cash equivalents
Current assets
Total assets
Equity
Share capital
Share premium
Shares to be issued
Capital redemption reserve
Share based payment reserve
Accumulated losses
Total Equity
Liabilities
Trade and other payables
Deferred consideration
Current liabilities
Total liabilities
Note
11
12
12
14
15
14
16
17
19
20
21
22
2021
£’000
-
301
428
3,334
2
4,065
179
153
780
1,251
2,363
6,428
7,705
18,438
-
5
1,541
(21,508)
6,181
247
-
247
247
2020
£’000
156
316
-
1,208
-
1,680
-
-
716
913
1,629
3,309
7,267
14,929
22
5
1,286
(20,508)
3,001
192
116
308
308
Total equity and liabilities
6,428
3,309
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent Company
is not presented as part of these financial statements. The loss for the financial year dealt with in the
financial statements of the parent Company was £1,015,000 (2020: loss of £1,283,000).
The notes on pages 43 to 80 are an integral part of these financial statements
Page 39
POWER METAL RESOURCES PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2020
Share
Capital
Share
premium
Shares to
be issued
Capital
Redemption
Reserve
£‘000
£‘000
£’000
£’000
Share
based
payment
reserve
£‘000
Retained
deficit
Total equity
£‘000
£‘000
1 October 2019
Loss for the period
Total comprehensive (expense) for the period
Issue of ordinary shares
Cost of share issues
Share-based payments
Total transactions with owners
6,843
13,228
-
-
443
-
-
443
-
-
1,768
(86)
1,682
Balance at 30 September 2020
7,286
14,910
-
-
-
22
-
-
22
22
5
-
-
-
-
-
-
5
-
1,195
(19,225)
2,046
(1,285)
(1,285)
(1,283)
(1,283)
-
-
-
-
2,233
(86)
91
2,238
3,001
1,286
(20,508)
-
-
-
-
91
91
The following describes the nature and purpose of each reserve:
Share Capital: Amount subscribed for share capital at nominal value.
Shares to be issued: Amount subscribed for share capital not yet issued at the reporting date.
Share based payment reserve: Amounts recognised for the fair value of share options and warrants granted.
Share Premium: Amount subscribed for share capital in excess of nominal value.
Capital Redemption Reserve: Amounts relating to the purchase of Company’s own shares.
Retained profits/(losses): Cumulative net profits/(losses) recognised in the financial statements.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 40
POWER METAL RESOURCES PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Share
Capital
Share
premium
Shares to
be issued
Capital
Redemption
Reserve
£‘000
£‘000
£’000
£’000
Share
based
payment
reserve
£‘000
Retained
deficit
Total equity
£‘000
£‘000
Balance at 1 October 2020
7,286
14,910
Loss for the period
Total comprehensive (expense) for the period
Adjustment for previous year
Issue of ordinary shares
Cost of share issues
Share-based payments
Warrants exercised
Total transactions with owners
-
-
(19)
438
-
-
-
419
-
-
19
3,547
(38)
-
-
3,528
Balance at 30 September 2021
7,705
18,438
22
-
-
-
(22)
-
-
-
(22)
-
5
-
-
-
-
-
-
-
-
5
1,286
(20,508)
3,001
(1,015)
(1,015)
(1,015)
(1,015)
-
-
-
-
15
15
-
3,963
(38)
270
-
4,195
6,181
1,541
(21,508)
-
-
-
-
-
270
(15)
255
The following describes the nature and purpose of each reserve:
Share Capital: Amount subscribed for share capital at nominal value.
Shares to be issued: Amount subscribed for share capital not yet issued at the reporting date.
Share based payment reserve: Amounts recognised for the fair value of share options and warrants granted.
Share Premium: Amount subscribed for share capital in excess of nominal value.
Capital Redemption Reserve: Amounts relating to the purchase of Company’s own shares.
Retained profits/(losses): Cumulative net profits/(losses) recognised in the financial statements.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 41
POWER METAL RESOURCES PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Cash flows from operating activities
Loss for the year
Adjustments for:
Fair value adjustment
Impairment
Expenses settled in shares
Share based payment expense
Changes in working capital:
(Increase) in trade and other receivables
(Decrease)/Increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Investment in joint ventures
Investment in financial assets
Investment in intangible assets
Proceeds from investment disposals
Purchase of property, plant and equipment
Net cash outflows from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Issue costs
Net cash inflows from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange (losses) on cash and cash equivalents
Cash and cash equivalents at 30 September
2021
£’000
(1,015)
(445)
156
-
270
(1,034)
(181)
58
(1,157)
(257)
(1,991)
(156)
261
(2)
(2,145)
3,678
(38)
3,640
338
913
-
1,251
2020
£’000
(1,283)
(415)
970
267
91
(370)
(178)
95
(453)
(201)
(504)
-
20
-
(685)
1,965
(85)
1,880
742
171
-
913
The notes on pages 43 to 80 are an integral part of these financial statements
Page 42
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
1.
Reporting entity
Power Metal Resources plc is a public company limited by shares which is incorporated and domiciled
in England and Wales. The address of the Company’s registered office is 201 Temple Chambers, 3-7
Temple Avenue, London EC4Y 0DT. The consolidated financial statements of the Company as at and
for the year ended 30 September 2021 include the Company and its subsidiaries. The Group is primarily
involved in the exploration and exploitation of mineral resources in Africa, Australia, Canada and the
US.
2.
Going concern
The financial statements are prepared on a going concern basis. In assessing whether the going concern
assumption is appropriate, the Directors have taken into account all relevant available information
about the current and future position of the Group, including current level of resources, additional
funding raised during the year and post-year-end, and the required level of spending on exploration
and drilling activities. As part of their assessment, the Directors have also taken into account the ability
to raise new funding whist maintaining an acceptable level of cash flows for the Group to meet all
commitments.
In the current business climate, the Directors acknowledge the COVID-19 pandemic and has
implemented logistical and organisational changes to underpin the Group’s resilience to COVID-19,
with the key focus being minimising the impact on critical work streams, ensuring business continuity
and conserving cash flows. COVID-19 may impact the Group in varying ways leading to the Group
reducing all non-essential expenditure, the potential impairment of assets held, the Group’s ability to
finance exploration and drilling activities and meet commitments relating to its investments, including
for transactions entered into after the financial reporting date (note 25). The inability to gauge the length
of such disruption further adds to this uncertainty. For these reasons, the preservation of cash flows is
a primary focus for the Directors.
The Directors have stress tested the Group’s cash projections, which involves preserving cash flows
and adopting a policy of minimal cash spending for a period of at least 12 months from the date of
approval of these financial statements. The Directors believe the measures they have put in place will
result in sufficient working capital and cash flows to continue in operational existence, assuming that
all exploration and drilling activities are managed carefully and curtailed if necessary. For the Group
to carry out the desired levels of exploration and drilling activities, the Directors believe that it needs
to secure further funding either from a strategic partner or subsequent equity raisings in the next
financial year, which the Group has succeeded in completing over recent years. Taking these matters
in consideration, the Directors continue to adopt the going concern basis of accounting in the
preparation of the financial statements.
The financial statements do not include the adjustments that would be required should the going
concern basis of preparation no longer be appropriate.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 43
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
3.
Basis of preparation
(a)
Statement of compliance
The consolidated financial statements have been prepared in accordance with international accounting
standards in conformity with the Companies Act 2006. The financial statements are prepared on the
historical cost basis or the fair value basis where the fair valuing of relevant assets of liabilities has been
applied.
(b)
(i) New and amended standards, and interpretations issued and effective for the financial
year beginning 1 October 2020
There were no new standards, amendments or interpretations effective for the first time for periods
beginning on or after 1 October 2020 that had a material effect on the Group or Company financial
statements.
(ii) New standards, amendments and interpretations in issue but not yet effective
At the date of approval of these financial statements, the following standards and interpretations which
have not been applied in these financial statements were in issue but not yet effective:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform –
Phase 2 – effective 1 January 2021
Amendments to IFRS 3 Business Combinations – Reference to the Conceptual Framework –
effective 1 January 2022*
Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets – effective 1
January 2022*
Annual Improvements to IFRS Standards 2018-2020 Cycle – effective 1 January 2022*
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as
Current or Non-current and Amendments to IAS 1: Classification of Liabilities as Current or
Non-current – Deferral of Effective Date – effective 1 January 2023*
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure of Accounting Policies – effective 1 January 2023*
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors –
Definition of Accounting Estimates – effective 1 January 2023*
*Not yet endorsed in the UK
The Directors do not expect that the adoption of these standards will have a material impact on the
financial information of the group or company in future periods.
Functional and presentation currency
(c)
These consolidated financial statements are presented in Pounds Sterling, which is the Company’s
functional and presentation currency. All financial information presented has been rounded to the
nearest thousand pounds, except where otherwise indicated.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 44
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
(d)
Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRS requires management
to make judgements, estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the year in which the estimates are revised and in any future years affected.
The estimates and assumptions that have the most significant effect on the amounts recognised in the
consolidated financial statements and/or have a significant risk of resulting in a material adjustment
within the next financial year are as follows:
Group
Carrying value of intangible assets
– Notes 4(f)
In arriving at the carrying value of intangible assets, the Group determines the need for impairment
based on the level of geological knowledge and confidence of the mineral resources. Such decisions are
taken on the basis of the exploration and research work carried out in the period utilising expert reports.
Classification of investments
- Note 4 (a) (ii)
The Group determines the classification of investment in associates based on whether significant
influence is held in the entity. The existence of significant influence is evidenced in the following ways:
-
-
-
-
-
Board of directors’ representation,
Management personnel swapping or sharing,
Material transactions with the investee,
Policy-making participation,
Technical information exchanges.
If there is no evidence of any of the above, the Group determines that investments held are classified
as financial assets.
Fair value measurement
- Note 4 (c)
All assets and liabilities for which fair value is measured and disclosed in the financial statements are
categorised within the fair value hierarchy (see note 4 (c) (ii).
For investments which are unlisted, the Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of unobservable inputs.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 45
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Classification of Joint Arrangements - Note 12
The Group determines whether it holds a joint arrangement if the parties to the joint arrangement are
bound by a contract and the contract gives two or more of those parties joint control of the
arrangement.
Once a joint arrangement has been identified, the Group class the arrangement as a joint operation if
the parties that have joint control of the arrangement have rights to the assets and obligations for the
liabilities relating to the arrangement.
The Group recognises the following in its financial statements in respect of a joint operation:
Its assets, including its share of jointly held assets,
Its liabilities, including its share of jointly incurred liabilities,
Its revenue from the sale of its share of output arising from the joint operation,
Its share of revenue from the sale of the output by the joint operation, and
Its expenses, including its share of any expenses incurred jointly.
A joint arrangement is classified as a joint venture if the arrangement is structured through a separate
vehicle. The Group accounts for its interest in a joint venture using the equity method.
Non current assets held for sale - Note 14
Management class assets as held for sale when they meet the following conditions:
Management is committed to sell,
The asset is available for immediate sale,
An active programme to locate a buyer is initiated,
The sale is highly probable, within 12 months of classification,
The asset is being actively marketed; and
Actions require to complete the plan indicate that it is unlikely the plan will be significantly
changed or withdrawn.
When the asset is initially classified as held for sale, the carrying amount of the asset is measured in
accordance with applicable international financial reporting standards, is recognised as a separate line
on the statement of financial position. After classification, the asset is measured at the lower of
carrying amount and fair value less costs to sell. Impairment is considered both at the time of
classification and subsequent measurement by the directors.
Parent
Receivables from Group undertakings
– Note 16
The Parent Company in applying the expected credit loss (ECL) model under IFRS 9 must make
assumptions when implementing the forward-looking ECL model. This model is required to be used
to assess the intercompany loans receivable from subsidiaries for impairment.
Estimations were made regarding the credit risk of the counterparty and the underlying probability of
default in each of the credit loss scenarios. The scenarios identified by management included
Production, Divestment, Fire-sale and Failure. These scenarios considered technical data, necessary
The notes on pages 43 to 80 are an integral part of these financial statements
Page 46
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
licences to be awarded, the Company’s ability to raise finance, and ability to sell the project. The
directors make judgements on the expected likelihood and outcome of each of the above scenarios, and
these expected values are applied to the loan balances.
4.
Significant accounting policies
The accounting policies set out below have been applied consistently throughout the year presented in
these consolidated financial statements and have been applied consistently by Group entities.
Basis of consolidation
(a)
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company made up to 30 September each year.
Business combinations
On acquisition, the assets and liabilities of a subsidiary are measured at their fair value at the date of
acquisition. Any excess of the cost of the acquisition over the fair values of the identifiable net assets
acquired is recognised as goodwill. If the aggregate of the acquisition-date fair value of the
consideration transferred and the amount recognised for the non-controlling interest (and where the
business combination is achieved in stages, the acquisition-date fair value of the acquirer’s previously
held equity interest in the acquiree) is lower than the fair value of the assets, liabilities and contingent
liabilities and the fair value of any pre-existing interest held in the business acquired, the difference is
recognised in profit and loss.
Subsidiaries and acquisitions
(i)
Business combinations are accounted for using the acquisition method as at the acquisition date – i.e.,
when control is transferred to the Group. Control is when the investor has power over the investee,
exposure or rights, to variable returns from its involvements with the investee, and the ability to use its
power over the investee to affect the amount of the investor’s returns.
The results of subsidiaries acquired or disposed of during the year are included in the statement of
comprehensive income from the effective date of acquisition, or up to the effective date of disposal, as
appropriate.
Non-controlling interests in subsidiaries are presented separately from the equity attributable to equity
owners of the parent Company. When changes in ownership in a subsidiary do not result in a loss of
control, the non-controlling shareholders’ interests are initially measured at the non-controlling
interests’ proportionate share of the subsidiaries net assets. Subsequent to this, the carrying amount of
non-controlling interests is the amount of those interests at initial recognition plus the non-controlling
interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-
controlling interests even if this results in the non-controlling interests having a deficit balance.
Equity accounted investees
(ii)
Associates
Associates are entities over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but not the ability to
control or jointly control those policies. Investments in associates are accounted for using the equity
method of accounting.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 47
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Joint Arrangements
Joint arrangements are where parties are bound by a contractual arrangement and that arrangement
gives two or more of those parties joint control of the arrangement. Joint arrangements are accounted
for using the equity method of accounting.
The group classifies its interests in joint arrangements as either:
-
-
Joint ventures: where the group has rights to only the net assets of the joint arrangement
Joint operations: where the group has both the rights to assets and obligations for the liabilities
of the joint arranagment.
In assessing the classification of interests in joint arrangements, the Group considers:
- The structure of the joint arrangement
- The legal form of joint arranagements structured through a separate vehicle
- The contractual terms of the joint arrangement agreement
- Any other facts and circumstances (including any other contractual arrangements).
The Group accounts for its interests in joint operations by recognising its share of assets, liabilities,
revenues and expenses in accordance with its contractually conferred rights and obligations. In
accordance with IFRS 11 Joint Arrangements, the Group is required to apply all of the principles of
IFRS 3 Business Combinations when it acquires an interest in a joint operation that constitutes a
business as defined by IFRS 3.
Equity method of accounting
Under the equity method of accounting, interests in associates and joint arrangements are initially
recognised at cost. The Group’s share of associates and joint arrangements post-acquisition profit / loss
after tax and other comprehensive income/ loss are presented as the ‘Share of results of Equity
accounted investees’ in the Group income statement and Group Statement of other comprehensive
income respectively. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment less any impairment in value. Where indicators of impairment arise, the
carrying amount of the associate is tested for impairment by comparing its recoverable amount against
its carrying value. Unrealised gains arising from transactions with associates are eliminated to the
extent of the Group’s interest in the entity. Unrealised losses are similarly eliminated to the extent that
they do not provide evidence of impairment of a transferred asset. When the Group’s share of losses in
an associate or joint arrangement equal or exceeds its interest in the associate, the Group does not
recognise further losses unless the Group has incurred obligations or made payments on behalf of the
entity. When the Group ceases to have or significant influence, any retained interest in the entity is re-
measured to its fair value at the date when or significant influence is lost with the change in carrying
amount recognised in the income statement. The Group also reclassifies any movements previously
recognised in other comprehensive income to the income statement.
Transactions eliminated on consolidation
(iii)
Intra-group balances and transactions, and any income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
(b)
Foreign currency
Foreign currency transactions
(i)
Transactions in foreign currencies are translated to the respective functional currencies of Group
entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated
The notes on pages 43 to 80 are an integral part of these financial statements
Page 48
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
in foreign currencies at the reporting date are retranslated to the functional currency at the exchange
rate at that date. The foreign currency gain or loss on monetary items is the difference between
amortised cost in the functional currency at the beginning of the period, adjusted for effective interest
and payments during the period, and the amortised cost in foreign currency translated at the exchange
rate at the end of the period.
Foreign currency differences arising on retranslation into an entity’s functional currency are recognised
in profit or loss.
Foreign operations
(ii)
The assets and liabilities of foreign operations are translated to pounds sterling at exchange rates at the
reporting date. The income and expenses of foreign operations are translated to pounds sterling at
exchange rates at the dates of the transactions, with differences recognised in other comprehensive
income.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither
planned nor likely in the foreseeable future, foreign currency gains and losses arising from such items
are considered to form part of a net investment in the foreign operation and are recognised in other
comprehensive income and presented in the exchange reserve in equity.
(c)
Financial instruments
Financial assets
(i)
The Group classifies its financial assets into one of the categories discussed below, depending on the
purpose for which the asset was acquired. The Group’s accounting policy for each category is as
follows;
Amortised cost
The Group's financial assets held at amortised cost comprise trade and other receivables and cash and
cash equivalents in the consolidated statement of financial position.
These assets are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They arise principally through the provision of goods and services to
customers (e.g., trade receivables), but also incorporate other types of financial assets where the
objective is to hold their assets in order to collect contractual cash flows and the contractual cash flows
are solely payments of the principal and interest. They are initially recognised at fair value plus
transaction costs that are directly attributable to their acquisition or issue and are subsequently carried
at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions for trade receivables are recognised based on the simplified approach within
IFRS 9 using the lifetime ECLs. During this process the probability of the non-payment of the trade
receivables is assessed. This probability is then multiplied by the amount of the expected loss arising
from default to determine the lifetime ECL for the trade receivables. For trade receivables, which are
reported net, such provisions are recorded in a separate provision account with the loss being
recognised within administrative expenses in the consolidated statement of comprehensive income. On
confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 49
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Cash and cash equivalents comprise cash and cash at bank balances.
Fair value through profit or loss
Financial assets held at fair value through the profit or loss comprise equity investments held. These
are carried in the statement of financial position at fair value (refer to fair value hierarchy below).
Subsequent to initial recognition, changes in fair value are recognised in the statement of
comprehensive income.
Financial liabilities
(ii)
The Group’s financial liabilities include trade and other payables. All financial liabilities are recognised
initially at fair value, net of transaction costs incurred, and are subsequently stated at amortised cost,
using the effective interest method.
Unless otherwise indicated, the carrying values of the Group’s financial liabilities measured at
amortised cost represents a reasonable approximation of their fair values.
Fair value
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial
statements are categorised within the fair value hierarchy. The fair value hierarchy prioritises the inputs
to valuation techniques used to measure fair value. The Group uses the following hierarchy for
determining and disclosing the fair value of financial instruments and other assets and liabilities for
which the fair value was used:
-
-
-
level 1: quoted prices in active markets for identical assets or liabilities;
level 2: inputs other than quoted prices included in level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices); and
level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
(d)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity, net of any tax effects.
(e)
Intangible assets
Prospecting and exploration rights
(i)
Rights acquired with subsidiaries are recognised at fair value at the date of acquisition. Other rights
acquired and development expenditure are recognised at cost.
Exploration and evaluation costs arising following the application for the legal right, are capitalised on
a project-by-project basis, pending determination of the technical feasibility and commercial viability
of the project. When a project is deemed not feasible, related costs are expensed as incurred. Costs
incurred include any costs pertaining to technical and administrative overheads. Administration costs
that are not directly attributable to a specific exploration area are expensed as incurred, and
subsequently capitalised if it is reasonably certain that a resource will be defined.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 50
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Capitalised development expenditure will be measured at cost less accumulated amortisation and
impairment losses.
Impairment
(f)
Whenever events or changes in circumstance indicate that the carrying amount of an asset may not be
recoverable an asset is reviewed for impairment. An asset’s carrying value is written down to its
estimated recoverable amount (being the higher of the fair value less costs to sell and value in use) if
that is less than the asset’s carrying amount.
Impairment reviews for deferred exploration and evaluation expenditure are carried out on a project
by project basis, with each project representing a potential single cash generating unit. An impairment
review is undertaken when indicators of impairment arise such as:
- unexpected geological occurrences that render the resource uneconomic;
-
-
-
title to the asset is compromised;
variations in mineral prices that render the project uneconomic;
substantive expenditure on further exploration and evaluation of mineral resources is neither
budgeted nor planned; and
the period for which the Group has the right to explore has expired and is not expected to be
renewed.
-
Impairment losses are recognised in profit or loss. For all assets, an impairment loss is reversed only to
the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Employee benefits – share based payments
(g)
The grant date fair value of share-based payment awards granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period that the employees become
unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the
number of awards for which the related service and non-market performance conditions are expected
to be met, such that the amount ultimately recognised as an expense is based on the number of awards
that meet the related service and non-market performance conditions at the vesting date. For share-
based payment awards with non-vesting conditions, the grant-date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for differences between expected
and actual outcomes.
Market vesting conditions are factored into the fair value of all options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether market vesting conditions are
satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where terms and conditions of options are modified before they vest, the increase in the fair value of
the options, measured immediately before and after the modification, is also charged to the income
statement over the remaining vesting period.
Finance income and finance expense
(h)
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues
in profit or loss, using the effective interest method.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 51
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions
and impairment losses recognised on financial assets.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a
qualifying asset are recognised in profit or loss using the effective interest method.
Taxation
(i)
Tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss
except to the extent that it relates to a business combination, or items recognised directly in equity or
in other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in
respect of previous years. Current tax payable also includes any tax liability arising from the declaration
of dividends.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred
tax is not recognised for:
-
-
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss; and
temporary differences related to investments in subsidiaries and jointly controlled entities to the
extent that it is probable that they will not reverse in the foreseeable future.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which
the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity,
or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis, or
their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which
they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realised.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 52
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Segmental information
(j)
An operating segment is defined as a component of an entity that engages in business activities from
which is may earn revenues and incur expenses, whose operating results are regularly reviewed by the
entity’s chief operating decision maker and for which discrete financial information is available.
The Group disclose reportable segments which are regularly reviewed by the chief operating decision
maker, (the CEO) and revenues, expenses and non-current assets in relation to each reporting segment
are presented in note 5 to the financial statements.
(k) Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held for sale when:
It is unlikely that significant changes to the plan will be made or that the plan will be withdrawn
- They are available for immediate sale
- Management is committed to a plan to sell
-
- An active programme to locate a buyer has been initiated
- The asset or disposal group is being marketed at a reasonable price in relation to its fair value, and
- A sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of:
- Their carrying amount immediately prior to being classified as held for sale in accordance with the
group's accounting policy; and
Fair value less costs of disposal.
-
Following their classification as held for sale, non-current assets (including those in a disposal group)
are not depreciated. The results of operations disposed during the year are included in the consolidated
statement of comprehensive income up to the date of disposal.
5.
Operating segments
The Group has one single business segment which is the exploration of mineral resources and
exploration.
During the year, the Group’s exploration and development activities focussed on several geographical
areas, with support provided from the UK headquarters. The non-current assets held by each
geographical segment is detailed in the table below. None of the segments generated revenue during
the period.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 53
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
2021
Intangible assets
Investments in
Joint Ventures
Financial Assets at
fair value through
profit or loss
Property, plant &
Equipment
Total
2020
Intangibles
Investments in
Joint Ventures
Financial Assets
Total
Australia Botswana Canada DRC Tanzania
£’000
-
166
£’000
614
£’000
3
£’000
-
-
-
US
UK
£’000 £’000 £’000
83
-
-
Total
£’000
700
-
-
-
-
-
-
-
166
128
926
501
3,527
-
2
-
2
128
928
584
4,395
35
392
1,545
-
201
-
-
1,006
1,548
Australia Botswana Canada DRC Tanzania
£’000
-
284
-
284
£’000
-
£’000 £’000
156
-
-
153
153
-
207
207
-
-
156
US
UK
£’000 £’000 £’000
-
-
-
-
49
49
-
-
641
641
158
158
2021
£’000
686
14
249
27
Total
£’000
156
284
1,208
1,648
2020
£’000
296
1
46
24
2020
£’000
18
249
-
29
-
296
6.
Operating expenses
Operating expenses include:
Staff costs (note 7)
Foreign exchange loss
Share based payment expense
Auditor’s remuneration – audit services
Auditor’s remuneration in respect of the Company amounted to £26,500 (2020: £23,500).
7.
Staff costs
Social security contributions
Directors’ salary and fees
Staff salaries
Share based payments
Pensions
2021
£’000
49
327
59
250
1
686
The notes on pages 43 to 80 are an integral part of these financial statements
Page 54
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
The monthly average number of employees (including Directors) during the period was:
Directors and staff
2021
5
5
2020
5
5
Three new employees joined the Group in the year ended 30 September 2021. There were no employees
other than the Directors in the year ended 30 September 2020.
8.
Directors’ emoluments
2021
Wages and salaries
Total
2020
Fees
Wages and salaries
Total
Executive
£’000
265
265
Executive
£’000
-
187
187
Non-
executive
£‘000
62
62
Non-
executive
£‘000
17
46
63
Total
£‘000
327
327
Total
£‘000
17
232
249
Emoluments disclosed above include the following amounts paid to the highest Director:
Emoluments for qualifying services
9.
Taxation
Reconciliation of tax (credit)/expense
Losses from operations
Tax using the Company’s effective domestic tax rate of 19% (2020:
19%)
Effects of:
Disallowable expenditure
Current losses with no recognisable deferred tax asset
2021
£’000
166
2020
£‘000
131
2021
£’000
(623)
2020
£’000
(1,414)
(118)
(269)
38
80
-
195
74
-
The notes on pages 43 to 80 are an integral part of these financial statements
Page 55
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Factors that may affect future tax charges
At the year end, the UK Company had unused tax losses available for offset against suitable future
profits of approximately £3,819,246 (2020: £3,253,737). A deferred tax asset has not been recognised in
respect of such losses due to uncertainty of future profit streams.The main rate of UK corporation tax
during the year ended 30 September 2021 was 19.00 per cent (2020: 19.00 per cent).
10.
Intangible assets
Group
Cost
As at 30 September 2019
Disposals
Balance at 30 September 2020
As at 30 September 2020
Reclassification from Investment in Joint Venture
Additions
Balance at 30 September 2021
Impairment
As at 30 September 2019
Charge
Disposals
Balance at 30 September 2020
As at 30 September 2020
Charge
Balance at 30 September 2021
Net book value
At 30 September 2020
At 30 September 2021
Prospecting
and
exploration
rights
£’000
7,793
(6,667)
1,126
1,126
273
527
1,926
6,667
970
(6,667)
970
970
156
1,126
156
800
The notes on pages 43 to 80 are an integral part of these financial statements
Page 56
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
The opening balance of intangible assets was initially recognised on the acquisition of the Kisinka
Copper-Cobalt project held by the Company’s subsidiary, Power Metal Resources SA. During the year,
the Directors took the decision to impair the Kisinka Project, and acquired interests in several other
projects, see below:
Intangible assets
Kisinka Copper-Cobalt Project
Athabasca Uranium Project
Tati Gold-Nickel Project
Garfield & Stonewall Projects
Ditau Camp/South Ghanzi Projects
Total
2021
£’000
-
3
186
83
528
800
2020
£‘000
156
-
-
-
-
156
The Directors regularly assess the carrying value of the Group’s assets, including its prospecting and
exploitation rights, and write off any exploration expenditure that they believe to be unrecoverable.
Kisinka Copper-Cobalt Project
Following the discovery of a 6.8km copper anomaly at the Company’s 70% owned Kisinka Project near
Lubumbashi in the DRC, Power Metal conducted a follow pitting, sampling, and mapping programme
in early 2020. The programme was conducted successfully on the ground with in-country X-ray
Fluorescence (XRF) of samples confirming the previously identified copper anomaly. Samples were
prepared for assay testing in South Africa, the results from which confirmed high grade copper and
cobalt.
The licence renewal at Kisinka Project was to be commenced in the year but the decision was taken
instead to convert the licence to a Permis d'Exploitation (production licence) with a 25-year life. As part
of the process 50% of the less prospective ground is to be surrendered, leaving the Company with 41
carrés miniers (each 84.95 ha). This licence was granted in May 2020.
Next stage exploration is drill testing of the 6.8km copper-cobalt geochemical anomaly identified
previously, with preparations continuing for drilling including target refinement and sourcing of
appropriate contractors.
A decision was taken to impair the value of the Kisinka Project in The Democratic Republic of the Congo
in full (£155,584) to reflect uncertainty due to the lack of progress in country in 2021, and reflecting the
increased importance of Power Metal investing operational resources and capital into its wider project
portfolio where material progress is being made. Work will continue in-country to seek more definitive
progress.
Athabasca Uranium Project
In September 2021, the Company acquired seven properties over a combined 24,097-hectares, giving
the Group a strong foothold in the prolific Athabasca basin, in northern Saskatchewan, Canada, all of
which are prospective for uranium mineralisation. The properties were acquired through 102134984
Saskatchewan Ltd, which is wholly owned by the Company’s wholly-owned subsidiary Power Metal
Resources Canada Inc.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 57
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Work is being undertaken to assemble detailed project information and to determine next steps for the
newly acquired properties.
Tati Gold-Nickel Project
The Company exercised its option to acquire a 100% interest in the Tati Gold-Nickel Project in July
2021, through its wholly owned operating subsidiary Power Metal Resources Botswana Pty Ltd.
The Project recently completed its Phase I and Phase II work programmes, which included high-
resolution soil sampling (1,107 samples collected), mapping and prospecting (49 rock samples
collected), as well as ground-based geophysics including high-resolution magnetic and radiometric
surveys.
The results have highlighted five target areas across the two licences, which are defined by kilometre-
scale geochemical anomalies that are coincident with various geological structures that were
highlighted by the ground geophysical surveys.
Drilling commenced early in October 2021, targeting large scale gold and nickel discoveries and which
will include roughly 1000m of reverse circulation (RC) drilling across the various target areas.
Garfield/Stonewall Projects
The two exploration properties in Nevada were acquired in June 2021, through the Company’s wholly
owned operational subsidiary, Golden Metal Resources Ltd.
Initial exploration now launched includes the processing of various Aster and Worldview-3
hyperspectal satellite imagery datasets over the Garfield Property, which will allow for the remote
mapping of various iron and hydrothermal alteration minerals. In October 2021, copper anomalies were
identified at the Garfield property. Remote sensing studies including Advanced Spaceborne Thermal
Emission and Reflection Radiometer and European Space Agency Sentinel-2 datasets highlighted
considerable additional prospective ground (now staked).
The Company have commissioned a gold deposit geologist to undertake a comprehensive historic data
analysis at the Stonewall property. Favourable structural zones for potential epithermal gold
mineralisation were identified near the eastern and western end of exposed Stonewall vein,
representing compelling high-priority exploration targets going forward.
Ditau Camp/South Ghanzi Projects
In September 2020, the Company acquired 50% of four prospecting licences in Botswana, from Kavango
Resources Plc, with a view to creating a new joint venture based in Botswana. During the year, the
licences were transferred into a new joint venture holding company, owned 50% by Kavango Resources
Plc, and 50% by Power Metal. As the original contractual arrangement for joint control of the licences,
rather than the holding company, remains in place, the investment has been reclassified as a joint
operation during the year (£273,000 as above, see note 13 joint operations for further details), and
subsequently the initial investment has been removed from Investments in Joint Ventures to Intangible
Assets with assets, liabilities, expenses and revenue for the period recognised on a line-by-line basis in
Power Metal’s financial statements.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 58
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Approval of the Environmental Management Plan was secured in October 2021 for the Kalahari Copper
Belt and Ditau Camp projects licence areas held in the Kanye Resources joint venture with Kavango
Resources plc clearing the last key administrative step prior to drilling key targets at the project areas.
Numerous prospective drill targets were identified across the South Ghanzi project in the Kalahari
Copper Belt targeting copper-silver, and at the Ditau Camp project targeting rare-earth elements and
base metal mineralisations.
Eight more prospecting licences were added to the South Ghanzi Project during the year. At the year
end Kanye Resources held 4,257km2 of prospective KCB ground over ten licences and 1,386km2 of
ground over two licences representing the Ditau Camp Project
11.
Investments in subsidiaries
Company
As at 30 September 2019
Disposals
Balance at 30 September 2020
As at 30 September 2020
Disposals
Balance at 30 September 2021
Impairment
As at 30 September 2019
Charge
Disposals
Balance at 30 September 2020
As at 30 September 2020
Charge
Balance at 30 September 2021
Net book value
At 30 September 2020
At 30 September 2021
Non-current investments
Investment in PMR
Total Investment in subsidiaries
Investment
in subsidiary
undertakings
£’000
5,819
(1,006)
4,813
4,813
-
4,813
4,693
970
(1,006)
4,657
4,657
156
4,813
156
-
2020
£‘000
156
156
2021
£’000
-
-
At the date of this report, all subsidiaries are still owned by the Company.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 59
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Directly
Activity
Country of
incorporation
Ownership
interest
Registered office
Golden Metal
Resources Ltd
Mining and
exploration
United Kingdom
100%
First
Development
Resources Ltd
Power Capital
Investments Ltd
Mining and
exploration
Mining and
exploration
United Kingdom
100%
United Kingdom
100%
Tati Greenstone
Resources Pty
Ltd
Power Metal
Resources
Botswana Pty
Ltd
Power Metal
Resources
Australia Pty
Ltd
Power Metal
Resources
Canada Inc
102134984
Saskatchewan
Ltd
Power Metal
Resources SA
Regent
Resources
Interests
Corporation
Cobalt Blue
Holdings Inc
Mining and
exploration
Mining and
exploration
Mining and
exploration
Mining and
exploration
Mining and
exploration
Botswana
100%
Botswana
100%
Australia
100%
Canada
100%
Canada
100%
indirectly
Mining and
exploration
Democratic
Republic of Congo
70%
Mining and
exploration
British Virgin
Islands
100%
Mining and
exploration
British Virgin
Islands
100%
201 Temple Chambers, 3-7
Temple Avenue, London,
United Kingdom, EC4Y 0DT
201 Temple Chambers, 3-7
Temple Avenue, London,
United Kingdom, EC4Y 0DT
201 Temple Chambers, 3-7
Temple Avenue, London,
United Kingdom, EC4Y 0DT
Plot 337/338, Corner Khama
Street & Selous Avenue,
Francistown, Botswana
Plot 13130, East Gate
Building, Broadhurst Mail,
Broadhurst, Gaborone,
Botswana
First Floor 160 Stirling
Highway, NEDLANDS,
Western Australia, 6009.
Suite 530, 355 Burand Street,
Vancouver, British
Columbia, V6C 2G8
1238 27th Aveneue E,
Vancouver, British
Columbia, Canada, V5V 2L8
No. 1022, Avenue of the
Congolese Armed Forces,
Gombe River Gallery,
Kinshasa, DRC
P.O. Box 2283, ABM
Chambers, Columbus
Centre, Road Town, Tortola,
British Virgin Islands
Intershore Chambers, Road
Town, Tortola, British
Virgin Islands
For the year ended 30 September 2021, the subsidiary Power Metal Resources SA incurred a loss of
£101,000 (2020: £109,000), and the subsidiary Golden Metal Resources Ltd incurred a loss of £21,000
(2020: £nil). There were no other material losses in the subsidiaries.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 60
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
12.
Investments in joint ventures
Group
Opening balance
Additions
Share of losses
Reclassification
Closing balance
Company
Opening balance
Additions
Reclassification
Closing balance
2021
Total
£’000
284
257
(102)
(273)
166
2021
Total
£’000
317
257
(273)
301
2020
Total
£‘000
-
317
(33)
-
284
2020
Total
£‘000
-
317
-
317
In April 2020, the company acquired 49.9% of Red Rock Australasia Pty Ltd (RRAL), with Red Rock
Resources Plc holding 50.1%. The joint venture was set up to build a strategic gold exploration portfolio
in Australia. During the year, Power Metal Resources Plc contributed £257,000 (2020: £44,000) to costs
incurred by RRAL in line with the joint venture agreement. At the year ended 30 September 2021, RRAL
had incurred a loss of approximately AUD $373,000 (2020: AUD $121,338). Power Metal Resources Plc
included its share of the loss in the financial statements for the year ended 30 September 2021. This
amounted to £102,000 (2020: £33,000). Summarised financial information for RRAL is listed below.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 61
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Current Assets
Cash and Cash Equivalents
Total Current Assets
Non-Current Assets
Mineral Tenements
Total Non-Current Assets
Total Assets
Liabilities
Payroll taxes
Other creditors
Total Liabilities
Non-Current Liabilities
Loan – Power Metal Resources Plc
Loan – Red Rock Resources Plc
Total Non-Current Liabilities
Net Liabilities
2021
Total
£’000
24
24
138
138
303
15
8
23
285
273
557
(417)
Total loss for the year ended 30 September 2021 in relation to RRAL was £204,770 (AUD$372,783).
Operating expenses include a charge of £14,526 in relation to depreciation (AUD$26,445).
In September 2020, the Company acquired 50% of four prospecting licences in Botswana, from Kavango
Resources Plc, with a view to creating a new joint venture based in Botswana. During the year, the
Company transferred £256,000 (2020: £273,000) towards the joint venture. During the year, the licences
were transferred into a new joint venture holding company, owned 50% by Power Metal and 50% by
Kavango Resources Plc. Power Metal does not have the rights to the net assets of the arrangement, and
therefore the arrangement has been reclassified as a joint operation arrangement during the year with
assets, liabilities, expenses and revenue recognised on a line by line basis in Power Metal’s financial
statements. See note 13 below.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 62
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
13.
Joint Operations
Power Metal is party to a contractual arrangement whereby it holds joint control of the Ditau and South
Ghanzi Projects in Botswana, with Kavango Resources Plc. As detailed above, in the year ended 30
September 2020, the arrangement was classed as a joint venture and the Company accounted for the
investment on an equity basis. During the year, the arrangement was reclassified to a joint operation,
at this point the investment carrying value was £273,000 as although the Projects were transferred into
a separate vehicle, Kanye Resources (Pty) Ltd, Power Metal does not hold the rights to the net assets of
the arrangement, but only the assets, liabilities, revenues and expenses relating to the Company’s
involvement and these items are recognised on a line by line basis in the consolidated financial
statements of Power Metal.
Monthly exploration costs are funded by Power Metal and Kavango Resources Plc on an equal basis
via monthly ‘cash calls.’ The funds are transferred to the Botswana entity by both companies and cash
calls fund exploration at both the Ditau and South Ghanzi Projects. These costs are capitalised as
exploration on the Kanye balance sheet, and therefore have been included in intangible assets on Power
Metal’s statement of financial position. The amount included for the year ended 30 September 2021 was
£428,000.
14.
Assets classified as held for sale
Post-year end, in December 2021, it was announced that Kavango Resources plc had signed a 3 month
option agreement to acquire up to 51.15% of the issued share capital of Kalahari Key Mineral
Exploration Pty Ltd, including the 5,313 shares currently held by Power Metal Resources. This does not
include the 40% project interest which Power Metal Resources earnt-into post-year end.
There was no profit or loss for the period associated with the current asset held for sale. The following
assets and liabilities were reclassified as held for sale:
Group & Company
Carrying amount of assets classified as held for sale
2021
£’000
153
153
2020
£‘000
-
-
The notes on pages 43 to 80 are an integral part of these financial statements
Page 63
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
15.
Financial assets at fair value through profit or loss
Group
Non-current
Opening balance
Additions
Fair value adjustment – equity investment
Fair value adjustment – derivative assets
Reclassfication
Disposals
Closing balance
Current
Opening balance
Additions
Fair value adjustment – derivative assets
Closing balance
Company
Non-current
Opening balance
Additions
Fair value adjustment – equity investment
Fair value adjustment – derivative assets
Reclassfication
Disposals
Closing balance
Current
Opening balance
Additions
Fair value adjustment – derivative assets
Closing balance
Listed
£’000
Unlisted
£’000
641
154
271
159
(96)
(30)
1,099
567
2,245
-
-
(153)
(232)
2,427
Listed
£’000
Unlisted
£’000
-
164
15
179
-
-
-
-
Listed
£’000
Unlisted
£’000
641
154
271
159
(96)
(30)
1,099
567
2,052
-
-
(153)
(232)
2,234
Listed
£’000
Unlisted
£’000
-
164
15
179
-
-
-
-
2021
Total
£’000
1,208
2,399
271
159
(249)
(261)
3,526
2021
Total
£’000
-
164
15
179
2021
Total
£’000
1,208
2,206
271
159
(249)
(261)
3,334
2021
Total
£’000
-
164
15
179
2020
Total
£‘000
309
504
214
201
-
(20)
1,208
2020
Total
£‘000
-
-
-
-
2020
Total
£‘000
309
504
214
201
-
(20)
1,208
2020
Total
£‘000
-
-
-
-
The notes on pages 43 to 80 are an integral part of these financial statements
Page 64
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
16.
Trade and other receivables
Group
Accounts receivable
Other receivables
Prepayments
Company
Receivables due from group undertakings
Accounts receivable
Other receivables
Prepayments
17.
Cash and cash equivalents
Group
Bank balances
Cash and cash equivalents
Company
Bank balances
Cash and cash equivalents
2021
£’000
104
19
52
175
2021
£’000
605
104
19
52
780
2021
£’000
1,281
1,281
2021
£’000
1,251
1,251
2020
£‘000
10
65
35
110
2020
£‘000
606
10
65
35
716
2020
£‘000
913
913
2020
£‘000
913
913
The notes on pages 43 to 80 are an integral part of these financial statements
Page 65
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
18.
Share capital
Ordinary shares in issue at 1 October
Issued for cash
Issued in settlement for expenses
Issued in settlement for acquisitions
Number of ordinary shares
2021
818,316,542
425,140,840
-
13,601,405
2020
372,838,101
416,626,316
28,852,125
-
In issue at 30 September – fully paid (par value 0.1p)
1,257,058,787
818,316,542
Deferred shares in issue at 1 October
In issue at 30 September
Number of deferred
shares
2021
3,628,594,957
3,628,594,957
2020
3,628,594,957
3,628,594,957
Balance at beginning of year
Prior Year Adjustment
Share issues
Balance at 30 September
Balance at beginning of year
Prior year adjustment
Share issues
Expenses relating to share issues
Balance at 30 September
Ordinary
share capital
2021
£’000
7,286
(19)
438
7,705
Share Premium
2021
£’000
14,910
19
3,547
(38)
18,438
2020
£‘000
6,843
-
443
7,286
2020
£‘000
13,228
1,768
(86)
14,910
The prior year adjustment relates to a previous misallocation between share capital and share premium,
relating to a share issue in the year ended 30 September 2017. £19,011 was incorrectly allocated to share
capital, this has been rectified in the year ended 30 September 2021, the amount has not been corrected
in the prior year as it is deemed immaterial.
All ordinary shares rank equally with regard to the Company’s residual assets.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 66
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Both classes of deferred shares (Deferred and Deferred A), do not entitle the holders thereof to receive
notice of or attend and vote at any general meeting of the Company or to receive dividends or other
distributions or to participate in any return on capital on a winding up unless the assets of the Company
are in excess of £1,000,000,000,000. The Company retains the right to purchase the deferred shares from
any shareholder for a consideration of one penny in aggregate for all that shareholder's deferred
shares. As such, the deferred shares effectively have no value. Share certificates will not be issued in
respect of the deferred shares.
Issue of ordinary shares
During the year, 425,140,840 shares were issued in relation to warrant exercises; 181,150,000 were
exercised at 1.0 pence per share, 5,000,000 were exercised at 2.0 pence per share, 6,000,000 were
exercised at 0.5 pence per share, 122,250,000 were exercised at 0.7 pence per share, and 110,740,840 were
exercised at 0.75 pence per share.
In January 2021, the Company secured an exclusive 60-day option to acquire a 100% interest in First
Development Resources Pty Ltd. The Company paid the vendors a total consideration of £30,000 for
the option, through the issue of 1,000,000 new ordinary shares at a price of 3.0 pence per share.
In January 2021, the Company signed an agreement to acquire a 100% interest in four separate gold
exploration properties located in Ontario, Canada. The Company paid the vendors a total consideration
of US$60,000 for the option, through the issue of 1,152,233 new ordinary shares at a price of 3.0 pence
per share.
In February 2021, the Company exercised its option to acquire a 100% interest in McKellar. The
Company paid the Vendors a total consideration of US$50,000 for the Option, through the issue of
960,000 new ordinary shares at a price of 3.0 pence per share.
In February 2021, the Company exercised its option to acquire the Coco East Property. The Company
paid the Vendors a total consideration of US$30,000 for the Option, through the issue of 576,000 new
ordinary shares at a price of 3.0 pence per share.
In February 2021, the Company exercised its option to acquire both the Magical Property and the Enable
Property. The Company paid the Vendors a total consideration of US$50,000 for the Option, through
the issue of 960,000 new ordinary shares at a price of 3.0 pence per share.
In April 2021, Power Metal accelerated its earn-in to the Silver Peak project to hold 30%. The final earn-
in payment of CAD$200,000 (£114,349) was made through the issue of 5,139,281 new ordinary shares
at a price of 2.225 pence per share.
In June 2021, the Company signed an agreement to to acquire gold-copper projects in Nevada. The
Company paid the vendors a total consideration of £61,875 for the option to be held by the Company’s
subsidiary, Golden Metal Resources Ltd, through the issue of 2,250,000 new ordinary shares in the
Company at a price of 2.75 pence per share.
In July 2021, the Company exercised its option to acquire a 100% interest in two gold-nickel exploration
licences within the Tati Greenstone Belt. The Company paid an initial consideration of £25,000 payable
through the issue to the Vendors of 833,333 new ordinary shares of 3.0 pence in the Company.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 67
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
In September 2021, the Company’s subsidiary acquired an option to acquire 100% interest in the Pilot
Mountain project. Consideration of £12,500 was paid through the issue of 500,000 new ordinary shares
in the Company at an issue price of 2.5 pence per share.
19.
Earnings per share
Basic and diluted loss per share
The calculation of basic and diluted loss per share is based on the loss attributable to ordinary
shareholders of £591,938 (2020: £1,381,290), and a weighted average number of ordinary shares in issue
of 1,079,317,932 (2020: 558,893,170).
20.
Share options and warrants
Reconciliation of outstanding share options:
2021
Outstanding at 1 October 2020
Granted during the year
Exercised
Outstanding at 30 September 2021
Exercisable at 30 September 2021
Number
of options
63,325,358
36,000,000
-
99,325,358
83,325,358
Weighted
average
exercise
price
(£’s)
0.03
0.03
-
0.06
0.023
The weighted average contractual life of the options outstanding at the reporting date is 297 days.
Exercise prices of share options outstanding at the end of the 2021 period:
£6.000
£0.050
£0.010
£0.010
£0.020
£0.033
97,500
1,000,000
27,227,858
15,000,000
20,000,000
20,000,000
2020
Outstanding at 1 October 2019
Granted during the year
Lapsed during the year
Outstanding at 30 September 2020
Exercisable at 30 September 2020
Weighted
average
exercise
price
(£’s)
0.04
0.02
0.20
0.26
0.24
Number
of options
28,375,358
35,000,000
(50,000)
63,325,358
58,375,358
The notes on pages 43 to 80 are an integral part of these financial statements
Page 68
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Directors Options
Included within the options issued in the year ended 30 September 2021 were 12,500,000 options issued
to directors (2020: 30,000,000).
2021
Andrew Bell
Paul Johnson
Scott Richardson Brown
Ed Shaw
2020
Andrew Bell
Paul Johnson
Scott Richardson Brown
Ed Shaw
Exercise price
(£’s)
0.033
0.033
-
-
Exercise price
(£’s)
0.020
0.020
0.010
0.010
Number of
Options
7,500,000
12,500,000
-
-
12,500,000
Number of
Options
7,500,000
12,500,000
5,000,000
5,000,000
30,000,000
The fair values of the options granted during the year were calculated using the Black Scholes Model
with the following assumptions:
Risk free interest rate
Expected volatility
Expected dividend yield
Life of the option
Share price at measurement date
0.198%
70%
0.00%
3 years
£0.00214
Reconciliation of outstanding warrants
2021
Outstanding at 1 October 2020
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding and exercisable at 30 September 2021
Weighte
d average
exercise
price
(£’s)
0.01
0.02
0.01
0.01
0.03
Number of
warrants
618,185,061
19,819,641
(7,810,000)
(425,140,890)
203,553,812
The weighted average contractual life of the warrants outstanding is 313 days.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 69
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
2020
Outstanding at 1 October 2019
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding and exercisable at 30 September 2020
Directors Warrants
Number of
warrants
218,431,480
432,526,316
(1,672,735)
(31,100,000)
618,185,061
Weighted
average
exercise
price
(£’s)
0.02
0.01
0.01
0.38
0.34
No warrants were issued to directors in the year ended 30 September 2021 (2020:Nil).
The fair values of the warrants granted during the year were calculated using the Black Scholes
Model with the following assumptions:
Risk free interest rate
Expected volatility
Expected dividend yield
Life of the option
Share price at measurement date
0.188%, 0.218% & 0.497%
70%
0.00%
2 years
£0.0213, £0.0215 & £0.0235
£249,717 (2020: £46,000) has been recognised as a share based payment expense in the Statement of
Comprehensive Income related to the issue of share options and warrants and £20,079 (2020: £45,000)
has been included in non-current assets as it relates to the acquisition of certain financial assets.
21.
Trade and other payables
Group
Trade payables
Accrued expenses
Company
Trade payables
Accrued expenses
Payable to group undertakings
2021
£’000
250
67
317
2021
£’000
146
74
27
247
2020
£‘000
24
137
161
2020
£‘000
24
137
31
192
The Group’s and Company’s exposure to currency and liquidity risk related to trade and other payables
is disclosed in note 23.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 70
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
22.
Deferred consideration
Group & Company
Deferred consideration
2021
£’000
-
2020
£‘000
116
The deferred consideration in the year ended 30 September 2020 related to $150,000 which the
Company committed to transfer to the joint venture held with Kavango Resources Plc over two years
from September 2020. This was paid in the year ended 30 September 2021.
23.
Financial instruments
Financial risk management
Overview
The Group has exposure to the following risks arising from financial instruments.
credit risk
liquidity risk
-
-
- market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s
objectives, policies and processes for measuring and managing risk, and the Group’s management of
capital.
Risk management framework
The Company’s board of Directors has overall responsibility for the establishment and oversight of the
Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the
Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and
the Group’s activities. The Group, through its training, management standards and procedures, aims
to develop a disciplined and constructive control environment in which all employees understand their
roles and obligations.
Cost may be an appropriate estimation of fair value at the measurement date only in limited
circumstances, such as for a pre-revenue entity when there is no catalyst for change in fair value, or if
the transaction date is relatively close to the measurement date. Other indicators include insufficient
recent information, a wide range of possible fair values and cost represents the best estimate.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 71
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below. The different
levels have been defined as follows:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),
Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly or indirectly (level 2),
Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
There have been no transfers between levels during the period. Additions to level 3 during the period
are valued based on cost of investment, for both the Group and the Company. See note 15 Financial
Assets at Fair Value through Profit or Loss for further detail.
Group
2021
Financial Assets at fair value
through profit or loss
Financial assets (fair value through
the profit or loss)
Company
2021
Financial Assets at fair value
through profit or loss
Financial assets (fair value through
the profit or loss)
Group & Company
2020
Financial Assets at fair value
through profit or loss
Financial assets (fair value through
the profit or loss)
Level 1
£’000
Level 2
£’000
Level 3
£’000
1,279
1,279
-
-
2,427
2,427
Level 1
£’000
Level 2
£’000
Level 3
£’000
1,279
1,279
-
-
2,234
2,234
Level 1
£’000
Level 2
£’000
Level 3
£’000
641
641
-
-
567
567
Total
£’000
3,706
3,706
Total
£’000
3,513
3,513
Total
£’000
1,208
1,208
The notes on pages 43 to 80 are an integral part of these financial statements
Page 72
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk at the reporting date was as follows:
Group
Trade and other receivables
Cash and cash equivalents
Company
Trade and other receivables
Cash and cash equivalents
Carrying
amount
2021
£’000
175
1,281
1,456
Carrying
amount
2021
£’000
780
1,251
2,031
2020
£‘000
110
913
1,023
2020
£‘000
716
913
1,629
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The following are the contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting agreements.
Group
30 September 2021
Non-derivative financial
liabilities
Trade and other payables
Carrying
amount
£’000
2 months
or less
£’000
2-12 months
£’000
More than
1 year
£’000
317
317
317
317
-
-
-
The notes on pages 43 to 80 are an integral part of these financial statements
Page 73
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
30 September 2020
Non-derivative financial
liabilities
Trade and other payables
Deferred consideration
Company
30 September 2021
Non-derivative financial
liabilities
Trade and other payables
30 September 2020
Non-derivative financial
liabilities
Trade and other payables
Deferred consideration
Carrying
amount
£’000
2 months
or less
£’000
2-12 months
£’000
More than
1 year
£’000
161
116
277
161
-
161
-
116
116
-
-
Carrying
amount
£’000
2 months
or less
£’000
2-12 months
£’000
More than
1 year
£’000
247
247
247
247
-
-
-
Carrying
amount
£’000
2 months
or less
£’000
2-12 months
£’000
More than
1 year
£’000
192
116
308
192
-
192
-
116
116
-
-
The Group reviews its facilities regularly to ensure that it has adequate funds for operations and
expansion plans.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
equity prices will affect the Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
Due to the nature of the Group’s operations, it will be mainly exposed to fluctuations in the price of
iron and gold. The Group, where able, will look to hedge its foreign currency exposure.
Currency risk
The Group operates internationally and is exposed to foreign currency risk arising on cash and cash
equivalents and receivables denominated in a currency other than the respective functional currencies
of Group entities. The currencies in which these transactions primarily are denominated are US Dollar
(USD), Canadian Dollar (CAD), Australian Dollar (AUD) and Botswana Pula (BWP). The following
balances were held in foreign currency at the reporting date are:
The notes on pages 43 to 80 are an integral part of these financial statements
Page 74
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Net foreign currency financial
(liabilities)/assets
USD
CAD
AUD
BWP
Total net exposure
Group
Company
2021
£’000
185
37
14
11
247
2020
£’000
354
38
42
-
434
2021
£’000
183
37
14
11
245
2020
£’000
354
38
42
-
434
Sensitivity analysis
A 10 per cent strengthening of sterling against the respective currencies at 30 September 2021 would
have increased/(decreased) equity and profit or loss by the amounts shown below:
Group
Profit and loss
USD
CAD
AUD
BWP
Total net exposure
2021
£’000
(19)
(4)
(1)
(1)
(25)
2020
£’000
(35)
(4)
(4)
-
(43)
Company
Profit and loss
USD
CAD
AUD
BWP
Total net exposure
2021
£’000
(18)
(4)
(1)
(1)
(24)
2020
£’000
(35)
(4)
(4)
-
(43)
Equity
2021
£’000
(19)
(4)
(1)
(1)
(25)
Equity
2021
£’000
(18)
(4)
(1)
(1)
(24)
2020
£’000
(35)
(4)
(4)
-
(43)
2020
£’000
(35)
(4)
(4)
-
(43)
A 10 per cent weakening of the sterling against the respective currencies would have an equal but
opposite effect.
Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. Capital consists of equity which at 30
September 2021 for the Group totalled £5,966,000 (2020: £2,394,000) and for the Company totalled
£6,181,000 (2020: £3,001,000).
Accounting classifications and fair values
Fair values and carrying amounts
The carrying values of financial assets and liabilities are all approximate to their fair values per the
statement of financial position.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 75
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
24. Related parties
In addition to matters reported in note 8, the following related party transactions took place during the
year ended 30 September 2021:
Andrew Bell, a Director who served during the year is also director of Red Rock Resources plc,
providing consultancy services to the Company. Further details on the joint venture arrangement with
Red Rock Resources plc is disclosed in the Chairman’s Statement and note 12 to the financial
statements. The total fees invoiced to the Company for the year ended 30 September 2021 was £37,700
(2020: £52,572), of which nil was outstanding at the year end and all of which related to office support
provided to the Company or repayment of costs incurred by Red Rock Resources plc on behalf of POW,
and then repaid.
Paul Johnson, a Director who served during the year is also director of Value Generation Limited, a
management consultancy business. The total fees invoiced to the Company for the year ended 30
September 2021 were £20,900 (2020: £18,084) of which nil was outstanding at the year end and all of
which related to office support provided to the Company or repayment of costs incurred by Value
Generation Limited on behalf of POW, and then repaid.
During the year, the Company advanced funds to Power Metal Resources SA, totalling £101,000 (2020:
£109,000). At 30 September 2021, £788,000 was outstanding (2020: £687,000). An expected credit loss of
£788,000 was recognised at the year-end in respect of the intercompany receivable (2020: £16,000),
impairing the balance in full, as per the decision taken by the directors to impair the investment.
During the year, the Company advanced funds to its subsidiary, Cobalt Blue Holdings, totalling £3,000
(2020: £6,000). The loan is repayable on demand and on 30 September 2021, £34,000 was outstanding
(2020: £31,000). A cumulative expected credit loss of £10,000 was recognised at the year-end in respect
of the intercompany receivable (2020: £2,000).
During the year, the Company advanced funds to its subsidiary, Regent Resources Interests
Corporation, totalling £3,000 (2020: £2,000). The loan is repayable to the subsidiary and as at 30
September 2021, £27,000 was owed (2020: £30,000).
During the year, the Company advanced funds to its subsidiary Golden Metal Resources Ltd, totalling
£233,000 (2020: £nil). The loan is repayable on demand and on 30 September 2021, £233,000 was
outstanding (2020: £nil). An expected credit loss of £17,000 was recognised at the year-end in respect of
the intercompany receivable (2020: £nil).
During the year, the Company advanced funds to its subsidiary, Power Metal Resources Australia Pty
Ltd, totalling £1,000 (2020: £nil). The loan is repayable on demand and on 30 September 2021, £1,000
was outstanding (2020: £nil). An expected credit loss of £100 was recognised at the year-end in respect
of the intercompany receivable (2020: £nil).
During the year, the Company advanced funds to its subsidiary, Power Metal Resources Canada Inc,
totalling £55,000 (2020: £nil). The loan is repayable on demand and on 30 September 2021, £55,000 was
outstanding (2020: £nil). An expected credit loss of £4,000 was recognised at the year-end in respect of
the intercompany receivable (2020: £nil).
The notes on pages 43 to 80 are an integral part of these financial statements
Page 76
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
During the year, the Company advanced funds to its subsidiary, Tati Greenstone Resources Pty Ltd,
totalling £114,000 (2020: £nil). The loan is repayable on demand and on 30 September 2021, £114,000
was outstanding (2020: £nil). An expected credit loss of £9,000 was recognised at the year-end in respect
of the intercompany receivable (2020: £nil).
During the year, the Company advanced funds to its subsidiary, First Development Resources Ltd,
totalling £32,000 (2020: £nil). The loan is repayable on demand and on 30 September 2021, £32,000 was
outstanding (2020: £nil). An expected credit loss of £3,000 was recognised at the year-end in respect of
the intercompany receivable (2020: £nil).
During the year, the Company advanced funds to its subsidiary, Power Capital Investments Ltd,
totalling £5,000 (2020: £nil). The loan is repayable on demand and on 30 September 2021, £5,000 was
outstanding (2020: £nil). An expected credit loss of £400 was recognised at the year-end in respect of
the intercompany receivable (2020: £nil).
25. Subsequent events
In November 2021, Power Metal raised over £1,050,000 gross proceeds through a placing of 60,000,000
new ordinary shares of 0.1 pence each, at an issue price of 1.75 pence per share. In conjunction with the
placing, each new ordinary shareholder receives an attaching warrant, to subscribe for a further new
ordinary share of 0.1 pence each, at an exercise price of 3.5 pence each, expiring after two years.
Following the end of this reporting period, to the date of signing, the Company has received funds of
£593,481 in relation to warrant and option exercises, issuing a total of 74,192,876 new ordinary shares.
Drilling programme commencement at Tati project in Botswana was announced October 2021 with
completion by the calendar year end and results dispatched to Intertek in Australia for assay testing.
New copper anomalies identified at the Garfield project in Nevada USA, with additional claims staked
to cover the ground footprint over the identified anomalies, as announced in October 2021.
In October 2021, it was announced that the final licence application was granted at the Wallal project,
leading to the Company signing a revised agreement to acquire 100% of First Development Resources
Australia Pty, via its subsidiary First Development Resources Ltd. The transaction consideration was
funded through the issue of 13,333,333 Power Metal new ordinary shares at an issue price of 2.75 pence
each and 13,333,333 warrants over Power Metal shares at an exercise price of 4.5 pence per ordinary
share. Additional consideration of 10,000,000 Power Metal shares at an issue price of 3.2 pence and
10,000,000 warrants over Power Metal shares with an exercise price of 5.0 pence per ordinary share will
be settled by Power Metal for all other Australia licences with interests held by First Development
Resources Pty Ltd, owned by third parties to be transferred to First Development Resources Pty Ltd.
Approval of the Environmental Management Plan was secured in October 2021 for the Kalahari Copper
Belt and Ditau Camp projects licence areas held in the Kanye Resources joint venture with Kavango
Resources plc clearing the last key administrative step prior to drilling key targets at the project areas.
In October 2021, Power Metal Resources Australia Pty Ltd, a subsidiary of the Company, submitted
two licence applications in South Australia covering 1,994km2 targeting Olympic Dam style
mineralisation.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 77
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
On 29 October 2021, the Group concluded the 100% share capital purchase of First Development
Resources Pty Ltd (‘FDR Australia’) for total consideration of £749,743, consisting of £36,200 cash
(AUD$66,000), 13,333,333 new ordinary shares in the Company at a share price of 2.75 pence, 10,000,000
new ordinary shares at a share price of 3.2 pence, and warrants with a total fair value of £26,876. FDR
Australia holds exploration interests in the Paterson region of Western Australia and work in 2021
identified three magnetic bullseye targets hosted within the Wallal Project. The acquisition meets the
definition of a business combination and will be accounted for using the acquisition accounting method
in accordance with the Group’s accounting policies.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and
goodwill are as follows:
Prospecting and exploration rights
Cash and cash equivalents
Total fair value
Consideration
Goodwill
There were no associated transaction costs.
Fair value
£’000’s
749
1
750
750
-
The Company announced in November 2021 the signing of a 3 month option agreement by Kavango
Resources plc to acquire 51.15% of Kalahari Key Minerals Exploration Pty Ltd. The acquisition will
include the 5,313 shares in Kalahari Key currently owned by Power Metal. The acquisition does not
affect the 40% project interest which the Company has earnt-in to. Following the transaction, Kalahari
Key is due to restructure, with the 40% project interest held by Power Metal to transfer to interest in
the company.
In November 2021, the Company announced it had signed an agreement for the 100% acquisition of
the Selta project, located in the Northern Territory, Australia. The acquisition will be made by the
Company’s wholly-owned subsidiary, First Development Resources Ltd ("FDR"). Consideration
includes AUD $25,000 cash and £100,000 payable through the issue of 1,499,250 shares in First
Development Resources Ltd at an issue price of 6.67 pence per share. Additional consideration in the
form of FDR shares will be due as each of the three licence applications are granted. Should all FDR
shares be issued Power Metals interest will dilute down to 83.33%. FDR is to seek a listing on the
London capital markets.
The Company announced in November 2021 it had exercised the option to acquire a 100% interest in
the Pilot Mountain Project from fellow AIM listed Thor Mining plc, via its wholly-owed subsidiary,
Golden Metal Resources Ltd. Power Metal paid consideration of US$1,650,000 through the issue of
48,118,920 new ordinary shares at an issue price of 2.5 pence per share (£1,202,973), together with a
US$115,000 cash payment and issue of Power Metal warrants to Thor Mining plc.
In November 2021 the Company announced drill assay results from its 30% owned Silver Peak Project
in British Columbia Canada demonstrating bonanza grade silver in 10 of 19 holes drilled, and in
December 2021, overlimit assays for copper, lead and antimony further increasing silver equivalent
grades by an average of 18.8%.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 78
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
In November 2021 a detailed exploration update covering the Nevada projects held through wholly
Power Metal owned Golden Metal Resources Limited was followed by a pre-IPO financing for Golden
Metal raising £750,000 for was announced in December 2021 at a pre-money valuation of £3.25million.
Golden Metal is seeking a listing on the London capital markets. Following completion of the financing
Power Metal’s holding in Golden Metal will dilute down to 83.13%.
In November 2021 the Company received notification of the grant of one exploration licence in the
Victora Goldfields of Australia.
In December 2021 the Company’s 49.9% holding in the Victoria Goldfields joint venture was hived up
to New Ballarat Gold Corporation PLC where Power Metal holds the same 49.9% interest. Diamond
drilling commenced in the joint venture properties located in the state of Victoria in December 2021.
Sampling assay results of initial uranium exploration at 3 properties in the Athabasca basin,
Saskatchewan, Canada were announced, demonstrating up to 38,600ppm (3.86%) uranium
highlighting the prospectivity of the uranium properties examined.
January 2022 saw the launch of inaugural diamond drilling at the 35% Power Metal owned Haneti
Project in Tanzania, with a 3 hole 1,000 drill programme, targeting nickel sulphide-copper-platinum
group metal mineralisation.
Also in January 2022 a ground reconnaissance programme was commenced in the Paterson Region,
Western Australia to review and access locations for a planned deep drill programme in 2022 seeking
gold-copper mineralisation at magnetic bullseye targets at the Wallal Project.
Following a rotary air blast drill programme completed in 2021 an inaugural diamond drilling
programme was launched in January 2022 at the Haneti Project in Tanzania, targeting nickel, copper,
cobalt and platinum group elements. The programme was completed in February 2022 with core
logging and sampling currently being prepared for analysis and laboratory assay testing.
January 2022 saw the successful transfer of Tati Project prospecting licences into Power Metal’s wholly
owned local operating company in Botswana triggering share and warrant payments to the vendors
January also saw the renewal of key prospecting licences at the Molopo Farms Complex project in
Botswana.
The initial results from a uranium project data compilation at the Athabasca Basin project interests in
Saskatchewan, Canada, demonstrating considerable prospectivity and to be used as the basis for
planned 2022 exploration programmes.
In January 2022, Power Metal completed the acquisition of the Pilot Mountain project into a newly
created Australian holding company and announced early clearance of a US$500,000 tail benefit
potentially due to vendor Thor Mining plc.
Diamond drilling commenced in January 2022 at the Haneti Project in Tanzania completing in February
2022, with samples being prepared for assay testing at SGS Tanzania.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 79
POWER METAL RESOURCES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
In February 2022 the Company received notification of the grant of three exploration licences at the
Selta Project in the Northern Territory, Australia.
The notes on pages 43 to 80 are an integral part of these financial statements
Page 80
Power Metal Resources plc
201 Temple Chambers, 3-7 Temple Avenue, London, England, EC4Y 0DT
www.powermetalresources.com